State of Arizona
Office
of the
Auditor General
PERFORMANCE AUDIT
Report to the Arizona Legislature
By Douglas R. Norton
Auditor General
DEPARTMENT OF
HEALTH SERVICES,
BUREAU OF
EMERGENCY
MEDICAL
SERVICES
April 1999
Report No. 99-6
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DOUGLAS R. NORTON, CPA
AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
DEPUTY AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
April 19, 1999
Members of the Arizona Legislature
The Honorable Jane Dee Hull, Governor
Dr. James Allen, Director
Department of Health Services
Transmitted herewith is a report of the Auditor General, A Performance Audit of the
Department of Health Services, Bureau of Emergency Medical Services. This report is
in response to a May 27, 1997, resolution of the Joint Legislative Audit Committee. The
performance audit was conducted as part of the Sunset review set forth in A.R.S. §§41-
2951 through 41-2957. This is the third in a series of reports to be issued on the
Department of Health Services.
This report addresses why the State needs to consider changing its current statutory
approach to regulating ambulance services, how the Bureau can improve its handling of
complaints against various certificate holders, including emergency medical
technicians, and how the Department handled the Bureau’s former Medical Director’s
potential conflict of interest. First, Arizona’s statutory Certificate of Necessity (CON)
system provides more regulation than is necessary for overseeing ambulance service,
does not meet its goals, and limits competition. We recommend that the Legislature
consider directing the Bureau to form a study group to advise the Legislature on
developing a new system for helping to ensure quality service, while increasing the
potential for competition within the industry. Second, the Bureau has taken steps since
August 1998 to ensure that complaints against certificate holders are resolved more
quickly. However, it still needs to improve complaint handling by providing adequate
staff training, expediting some complaint resolutions, adequately tracking complaint
files, and adopting an appropriate computer-tracking system. Finally, the report also
provides information about how the Department handled the Bureau’s former Medical
Director’s potential conflict of interest.
April 19, 1999
Page -2-
As outlined in its response, the Department notes that the decision to review the need
for the CON system rests with the Legislature. The Department agrees with, and has
agreed to implement, all recommendations addressed to it.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on April 20, 1999.
Sincerely,
Douglas R. Norton
Auditor General
Enclosure
i
SUMMARY
The Office of the Auditor General has conducted a performance audit of the Department of
Health Services, Bureau of Emergency Medical Services, pursuant to a May 27, 1997, resolu-tion
of the Joint Legislative Audit Committee. The audit was conducted under the authority
vested in the Auditor General by A.R.S. §§41-2951 through 41-2957. This is the third in a
series of six audits relating to the Department of Health Services.
The Bureau of Emergency Medical Services (Bureau) is responsible for protecting the health
and safety of people requiring emergency medical services. With 34 full-time equivalent
positions located in one administrative and four regional offices, the Bureau certifies emer-gency
medical technicians, regulates ambulance service through the statutory Certificate of
Necessity (CON), and handles complaints against individuals and ambulance companies.
The Bureau also oversees statewide emergency medical services by administering a com-puterized
database of trauma cases and supporting three advisory boards and four regional
councils.
The Certificate of Necessity Is
An Unnecessary Form of Regulation
(See pages 5 through 10)
This audit found that the statutory Certificate of Necessity (CON) provides more regulation
than is necessary for overseeing ambulance service and limits competition. Arizona’s cur-rent
system of regulation dates from 1982 and is generally intended to ensure ambulance
coverage throughout the State and to provide assurance of quality services. It statutorily
requires that companies or local governments obtain a Certificate of Necessity to operate an
ambulance service in each geographic area they intend to serve. Arizona is one of only
seven states using a CON system for ambulance regulation.
The CON system does not guarantee that all areas of the State have adequate ambulance
coverage or that CON holders provide quality service sufficient to meet basic safety re-quirements.
Some locations in the State are not in any provider’s service area. Under the
CON system, the Bureau has no authority to compel providers to provide service to these
locations. Examples include Highway 89 from Flagstaff to Page and Highway 93 from
Wickenburg to Wikieup. As a result, unregulated rescue services and costly air ambulances
are often used in place of ambulances in those and other areas that have inadequate cover-age.
Even within CON service areas, the system is ineffective for ensuring quality. The Bu-reau
does not systematically monitor key quality indicators, including ambulance response
times. Furthermore, quality can be monitored without a CON system. Arizona has several
regulations for controlling the quality of ambulance services that are separate from the CON
system.
ii
The Certificate of Necessity system limits competition by creating a barrier to those indi-viduals
or companies wishing to enter the ambulance service market. In addition to demon-strating
their own qualifications, CON applicants can be required to demonstrate that the
existing ambulance service provider does not meet the provisions of its CON. If existing
CON holders are meeting the response times specified on their certificates and responding
to all calls, the Department may decide there is no need for new service, even if applicants
can demonstrate faster response times or other service improvements. The CON system also
prevents local governments from finding ambulance service that might better and more
affordably meet their communities’ needs, including possibly providing services through
their own fire departments.
The Legislature could consider directing the Bureau to form a study group to advise it on
the need to reevaluate the CON system in light of its limitations in meeting state regulatory
goals and its adverse impact on competition. Other forms of regulation used by other states
might be effective without the problems that accompany the CON system. For example, the
Department could license and regulate the quality of ambulance service without limiting the
number of providers, or the Department could establish minimum service standards and
allow local governments to determine appropriate levels of service.
If the CON is continued, quality and coverage oversight should be improved. The Bureau
could more thoroughly use CON regulatory mechanisms to monitor quality, update and
improve response time measures and accountability, and create easily accessible documen-tation
of provider information.
The Bureau Does Not Adequately
Handle Complaints
(See pages 11 through 17)
Although the Bureau’s current complaint-handling process has improved since the Office of
the Auditor General’s last report in 1988 (see Auditor General Report No. 88-12), the Bureau
still needs to improve its handling of complaints against emergency medical technicians,
paramedics, ambulance companies, and related entities. Under A.R.S. §36-2204, the Bureau is
responsible for investigating and resolving complaints of substandard patient care and un-professional
conduct against emergency medical technicians; and complaints regarding fees,
response times, and territorial infringement against ambulance companies. The Depart-ment’s
Office of Special Investigations formally investigates all complaints against emer-gency
medical technicians or paramedics, complaints involving patient care allegations, and
appealed informal complaints. Other complaints are handled informally by Bureau staff.
Since August 1998, the Bureau has taken steps to ensure that final resolution decisions are
made in a more timely manner. However, Auditor General staff found that 22 complaints
from the period prior to August 1998 remained open for more than two-and-a-half years,
awaiting a final decision after the investigations had been completed in a timely manner.
iii
The delay compromised the Bureau’s ability to resolve complaints and, in some cases, im-pose
appropriate discipline.
Other problems are related to the Bureau’s procedures for handling complaints, both infor-mally
and formally. Informal complaints are hampered by a lack of monitoring and a lack of
complaint investigation training on the part of Bureau staff, who handle all such complaints.
Formal complaints continue to be hampered by slow processing, poor tracking of files, an
inadequate database, and inadequate notification provided to complainants about the status
of their cases.
The Bureau has recognized some of these complaint-handling problems and has begun to
make improvements. It plans to implement a new case management plan, which includes
policies and procedures for complaint handling. The Bureau has also recognized the need
for an improved complaint tracking system for these complaints and is taking steps to ad-dress
some of the problems. Further changes, however, are still required to correct prob-lems.
These changes include better tracking and management of complaints that are han-dled
informally, training for personnel who investigate such complaints, and better com-munications
with complainants.
Other Pertinent Information
(See pages 19 through 20)
The Bureau’s former medical director faced a potential conflict of interest because her
spouse works for the State’s largest for-profit ambulance service provider. The Bureau
sought legal direction on the matter and subsequently wrote, but did not consistently fol-low,
an internal policy directing the former medical director to refrain from reviewing any
complaints against the spouse’s employer or any of its competitors, including complaints
against individual employees of such companies. The former medical director participated
or made decisions in several complaint cases, although the audit staff found no inappropri-ately
resolved complaints. To avoid this situation in the future, the Department of Health
Services reports that it now closely scrutinizes potential conflicts of interest prior to hiring
Bureau managers. Auditor General staff reviewed the Statements of Independence of the
Bureau’s new Chief and Medical Director and found that both should be able to impartially
perform their duties.
iv
(This Page Intentionally Left Blank)
v
Table of Contents
Page
Introduction and Background........................................................... 1
Finding I: The Certificate of Necessity
Is An Unnecessary Form of Regulation ...................................... 5
The Certificate of
Necessity System.............................................................................................................. 5
Current Approach Does Not
Meet Goals and Is Unnecessary..................................................................................... 6
CON System
Limits Competition.......................................................................................................... 7
CON System Should
Be Reevaluated.................................................................................................................. 9
Recommendations............................................................................................................ 10
Finding II: The Bureau Does Not
Adequately Handle Complaints.................................................... 11
Current Complaint-
Handling Process.............................................................................................................. 11
Final Resolution Decisions
Delayed in the Past........................................................................................................... 12
Other Complaint-Handling
Problems Still Exist........................................................................................................... 13
Bureau Beginning to
Make Some Improvements............................................................................................. 16
Recommendations............................................................................................................ 17
Other Pertinent Information............................................................... 19
Agency Response
vi
Table of Contents (concl’d)
Page
Tables
Table 1 Department of Health Services
Bureau of Emergency Medical Services
Statement of Revenues, Expenditures,
and Changes in Fund Balance
Years Ended or Ending June 30, 1997, 1998, and 1999 ............. 3
Table 2 Department of Health Services
Bureau of Emergency Medical Services
Days Needed to Resolve Complaints
Years Ended June 30, 1993 through 1998.................................... 15
1
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance audit of the Department of
Health Services, Bureau of Emergency Medical Services, pursuant to a May 27, 1997, resolu-tion
of the Joint Legislative Audit Committee. The audit was conducted under the authority
vested in the Auditor General by A.R.S. §§41-2951 through 41-2957. This is the third in a
series of six audits relating to the Department of Health Services.
Bureau of Emergency Medical
Services’ Responsibilities
The Bureau of Emergency Medical Services plans and coordinates the State’s emergency
medical care system. Federal estimates indicate that the average American will need ambu-lance
service at least twice in his or her lifetime. The Bureau’s mission is to protect the health
and safety of people requiring emergency medical services through certification, licensure,
and promotion of Arizona’s emergency medical service systems.
The Bureau has three main areas of responsibility:
n Emergency Personnel—The Bureau certifies emergency medical technicians and tech-nician
training programs, handles complaints against emergency medical technicians
(EMTs), and disciplines violators. There are currently 9,044 certified basic and interme-diate
emergency medical technicians and 2,360 certified paramedics in Arizona.
n Ambulance Services—The Bureau regulates ambulance service by setting ambulance
service rates and issuing Certificates of Necessity to ambulance providers. These Certifi-cates
establish providers’ geographic service areas and required response times. The Bu-reau
also inspects all air and ground ambulances, investigates complaints against am-bulance
providers, disciplines violators, and certifies hospitals that provide medical di-rection
to ambulance providers and receive emergency patients. Currently, 74 ambu-lance
service providers hold 83 Certificates of Necessity and operate approximately 533
ambulances in Arizona.
n Statewide Oversight—The Bureau provides statewide oversight of emergency medical
services through several means. It maintains the State Trauma Registry, a computerized
database of the incidence of, causes, severity, outcomes, and operation of trauma system
cases. In addition, it provides administrative support to several advisory committees in-cluding
the State Trauma Advisory Board, the State Emergency Medical Services Coun-cil,
the Medical Direction Commission, and four regional councils. These seven bodies
2
guide the Bureau in developing policy and programs. The Bureau also administers a
grants program for emergency medical service providers to purchase supplies and
capital equipment.
Bureau of Emergency Medical Services
Organization and Staffing
The Bureau of Emergency Medical Services is a unit within the Department of Health Serv-ices,
Public Health Division. It has a total of 34 full-time equivalent employees (FTE). Four-teen
FTEs staff a Phoenix-based administrative office that regulates ambulance services
statewide and oversees a reorganized structure of four regional offices.1 The regional offices
are responsible for certification, ambulance inspection, grant making, informal complaint
handling, and some hospital oversight. The Central Region office is in Phoenix and has a
staff of 8. The Southeastern Region office, in Tucson, has 5 FTEs. The Northern Region office
is in Flagstaff and has 4 FTEs. The Western Region office is housed in Phoenix and is staffed
by 3 FTEs. The Department of Health Services supports the Bureau, particularly through the
Office of Special Investigations, which investigates formal complaints against emergency
medical technicians and ambulance providers.
Budget
The Bureau is financially supported by a portion of a surcharge on fines charged for crimi-nal
offenses and traffic violations and by 0.3 percent of the Telecommunications Services
Excise Tax. Expenditure of these monies requires legislative authorization. Table 1 (see page
3) illustrates the Bureau’s actual and estimated revenues and expenditures for fiscal years
1997-1999.
Audit Scope
and Methodology
Audit work was conducted to determine whether the Bureau effectively regulates ambu-lance
services through the Certificate of Necessity program, and whether the Bureau ade-quately
tracks, investigates, and resolves complaints. The audit presents findings and rec-ommendations
in two areas:
1 Previously, the Bureau had separate sections handling emergency personnel certification, the Certifi-cate
of Necessity program, and the statewide trauma system. The sections operated primarily from
the Phoenix office. The Tucson and Flagstaff offices employed ambulance inspectors and administra-tive
staff. The Flagstaff office also monitored hospitals who oversee emergency medical personnel.
3
Table 1
Department of Health Services
Bureau of Emergency Medical Services
Statement of Revenues, Expenditures, and Changes in Fund Balance
Years Ended or Ending June 30, 1997, 1998, and 1999
(Unaudited)
1997 1998 1999
(Actual) (Actual) (Estimated)
Revenues:
Fines and forfeits 1 $3,312,692 $3,618,552 $3,908,000
Use taxes 2 1,584,624 1,815,626 2,035,000
Total revenues 4,897,316 5,434,178 5,943,000
Expenditures:
Personal services 797,110 823,735 1,015,300
Employee related 186,391 191,227 231,900
Professional and outside services 110,621 326,912 241,200
Travel, in-state 46,609 50,232 51,500
Travel, out-of-state 4,701 6,180 5,600
Aid to organizations 3 1,874,012 2,020,204 2,028,300
Other operating 495,751 434,758 481,500
Capital outlay 392,588 199,364 166,100
Total expenditures 3,907,783 4,052,612 4,221,400
Excess of revenues over expenditures 989,533 1,381,566 1,721,600
Fund balance, beginning of year 1,844,095 2,833,628 4,215,194
Fund balance, end of year 4 $2,833,628 $4,215,194 $5,936,794
1 The Department receives a portion of fines charged for criminal offenses and traffic violations to fund
various statewide emergency medical services, including Bureau operations.
2 The Department receives 0.3 percent of Telecommunication Services Excise Tax revenue to fund the
University of Arizona Poison Control Center and poison control services in Maricopa County. This
revenue is passed through to other entities and is included in “Aid to organizations.”
3 Includes amounts passed through to other entities for poison control and grants awarded to emer-gency
medical service providers for ambulance purchases and services, emergency receiving facili-ties,
and rescue services.
4 The Department must receive legislative authorization to spend the Bureau’s fund balance.
Source: The Uniform Statewide Accounting System Revenues and Expenditures by Fund, Program, Organi-zation,
and Object and Trial Balance by Fund for the years ended June 30, 1997 and 1998; the State of
Arizona Appropriations Report for the years ended or ending June 30, 1997, 1998, and 1999; and
Division-estimated revenues and expenditures for the year ending June 30, 1999.
4
n The need for the Bureau to address problems in its regulatory approach to ambulance
service provision; and
n The need for the Bureau to improve its complaint-handling process.
Major audit methods included:
n An analysis of the electronic complaint database containing information on the 360 for-mal
complaints filed between fiscal years 1993 and 1998;1
n An in-depth telephone survey of the emergency medical services agencies of 14 states
that are geographically and demographically similar to Arizona or were identified by
emergency medical services experts;2
n A survey of the remaining 35 states regarding whether or not they have a Certificate of
Necessity system;
n A review of relevant Arizona statutes; other states’ emergency medical services agency
literature, statutes, and rules; recent legal rulings on ambulance service; and current lit-erature
on ambulance and public utility regulation and deregulation;
n An analysis of all 15 initial Certificate of Necessity applications filed between 1994-1998;
and
n Interviews with emergency medical services experts, legislative staff, a Governor’s Office
representative, five professional association representatives, Department of Public Safety
representatives, five current Certificate of Necessity holders, a rescue service provider,
and three emergency medical service providers who do not have a Certificate of Neces-sity,
but are interested in obtaining one. Industry representatives came from rural, ur-ban,
and suburban areas.
This audit was conducted in accordance with government auditing standards.
The Auditor General and staff express appreciation to the Department of Health Services
Director and the Bureau of Emergency Medical Services’ Chief, Medical Director, and staff
for their cooperation and assistance throughout the audit.
1 Database was verified through a statistical sample of 70 complaint files.
2 California, Colorado, Connecticut, Florida, Illinois, Kansas, Missouri, Montana, Nevada, New Mex-ico,
Oregon, Texas, Utah, and Washington.
5
FINDING I
THE CERTIFICATE OF NECESSITY
IS AN UNNECESSARY FORM OF REGULATION
Arizona’s Certificate of Necessity (CON) system provides more regulation than is necessary
for overseeing ambulance service. CON systems are intended to ensure ambulance coverage
throughout the State and to provide quality assurance. Arizona’s CON system does not
guarantee either of these outcomes, and further, limits competition in the provision of am-bulance
services. By limiting the ability of new ambulance services to enter a particular geo-graphic
area, the CON system may also prevent the introduction of service improvements
that would better meet a community’s needs. The system should be reevaluated, and other
forms of regulation should be considered.
The Certificate of
Necessity System
Arizona’s current system for regulating ambulance services dates from 1982, when voters
approved a Constitutional amendment to reinstate ambulance regulation. The resulting
amendment provides for the Legislature’s regulatory authority over ambulances in “all
matters relating to service provided, routes served, response times and charges.”1 To fulfill
this authority, the Legislature enacted statutes establishing the CON system. Only seven
states, including Arizona, now use a CON system for ambulance regulation.
Under A.R.S. §36-2233, companies or local governments must apply to the Bureau for a
Certificate of Necessity to operate an ambulance service in each geographic area they intend
to serve. Applicants must meet criteria demonstrating that they are qualified to offer service.
The Department must also find public need for the service, based on demand and the effect
upon any existing providers in the geographic area. The application is heard before an ad-ministrative
law judge if it is an initial application, the Bureau intends to oppose the appli-cation,
or somebody requests a hearing. The judge makes a recommendation to the De-partment
of Health Services Director, who has ultimate approval authority. If the Director
approves the application, the Bureau issues a Certificate of Necessity that delineates loca-tions
of the central and sub-operation ambulance stations, the types of service to be pro-vided,
average response times, and the geographic area to be covered.
1 Constitution of the State of Arizona, Article XXVII, Regulation of Public Health, Safety and Welfare.
6
Current Approach Does Not
Meet Goals and Is Unnecessary
The CON system as established in statute does not fulfill its intended goals and is not neces-sary
for the fulfillment of these goals. First, the CON system does not ensure all areas of the
State are covered by a ground ambulance service. Specifically, it does not oblige ambulance
services to cover remote or unprofitable areas outside the area delineated in their CON. In
areas with insufficient coverage, unregulated services sometimes substitute for ambulance
providers. Second, because the Bureau does not effectively monitor and enforce the quality
requirements that are contained within the CON, the current CON system does not ade-quately
ensure quality ambulance service to the public. Additionally, the CON system is
unnecessary for meeting such regulatory goals as quality assurance and fee regulation.
CONs do not guarantee coverage—The CON statutes do not provide the Bureau the
authority to compel providers to cover remote or unprofitable areas or to improve response
times to these regions. Bureau officials indicated that some sections of the State are not in-cluded
in any provider’s CON service area or lack adequate coverage. If the area is uncov-ered,
a CON holder in an adjacent region normally provides service. In these situations, the
provider is not required to meet response time standards because these regions are not
within its CON. Uncovered and underserved areas include some stretches of state high-ways,
such as Interstate 89 from Flagstaff to Page, and Highway 93 from Wickenburg to
Wikieup.
Additionally, the Bureau’s method of storing CON information does not ensure that agen-cies
handling emergencies know which service is located closest to the emergency or can
respond in the shortest time. Although each CON contains important information about the
provider’s base of operation, service area, and response times, the Bureau does not delineate
this information on a map or other standardized format. As a result, this information cannot
be easily shared with other agencies. For example, the Department of Public Safety (DPS)
often has the responsibility of placing a call for an ambulance after highway accidents. Be-cause
the Bureau does not maintain CON information in a readily accessible format, DPS
develops and maintains its own ambulance provider lists and does not cross-reference its
lists with information from the Bureau. Providing standardized information could help DPS
and other local and state agencies ensure that the ambulance services called are CON hold-ers,
and the fastest and closest service to the accident.
Unregulated services and costly air ambulances fill deficiencies—Rescue services and air
ambulances are often used in place of ambulances for areas that have inadequate ambulance
coverage. While rescue services may represent the only feasible alternative for emergency
transport in undercovered areas, the State does not regulate these providers. Under A.R.S.
§36-2217(A)(4), rescue vehicles are exempt from CON regulations because they “are pri-marily
used to provide on scene stabilization.” However, in uncovered or undercovered
areas, where immediate ambulance transport is not possible, rescue services can either
transport patients to rendezvous with the nearest ambulance or directly to a hospital.
7
Moreover, because rescue services are exempt from regulation, they can use this exemption
as a way to provide unlicensed ambulance transport and avoid the CON application proc-ess.
Because they are unregulated, the Bureau cannot directly monitor rescue service quality.
Similarly, air ambulances have helped alleviate some of the difficulty covering remote areas,
particularly if it is evident that ground transport will result in especially lengthy response
times. However, air ambulances are more expensive than ground transports and are unnec-essary
for some types of inter-facility transports in which the patient is stabilized.
CONs ineffective for ensuring quality—In addition to not guaranteeing ground ambulance
coverage, the CON system does not meet its goal of providing an effective method for en-suring
quality service. Although providers’ certificates contain required response times for
their service areas, and although ambulance providers must record this information and
submit it to the Bureau, there is no standardized definition of “response times” in Bureau
statutes or rules. As a result, CON holders may be calculating response times differently.
Further, the Bureau does not consistently conduct analysis of this data. Currently, the Bu-reau
conducts a review of dispatch logs only if complaints have been made against the pro-vider.
Moreover, required response times reflected on the CONs are estimates the providers
calculate at the time they submit their initial application. Consequently, response times may
be out-of-date because they do not reflect population growth or other changes in an area’s
demographics.
Other quality indicators, such as patient outcomes, are not incorporated in CONs or re-viewed
in the CON application and renewal processes. In fact, although CON holders are
required to renew their certificates every three years, the Bureau does not conduct perform-ance
reviews and rarely denies a request for renewal.
CONs unnecessary for ensuring quality and regulating fees—Ambulance service quality
and charges could be regulated without the CON system. Many emergency medical service
agencies, in states without a CON system, monitor response times and suspend provider
services. Furthermore, the Bureau has quality control regulations that do not depend on the
CON system. For example, it has regulations regarding how hospitals oversee emergency
medical personnel, ambulance design requirements, inspections of EMT/paramedic certifi-cations,
and vehicle inspections. Additionally, the fees ambulance providers charge can be
regulated without the CON system. Currently, the Bureau sets ambulance provider fees
based on the CON service area. However, this is not required by statutes or rules.
CON System
Limits Competition
While the CON system does not meet its intended goals, it also limits competition in the
ambulance industry. The Certificate of Necessity system creates a barrier to other service
providers wishing to enter the market, and the application process upon which it is based is
8
perceived as favoring current CON holders. Moreover, because the Bureau administers the
CON at the statewide level, local governments are denied a role in choosing ambulance
service.
CON system creates a barrier to entering the market—Companies and local governments
that wish to provide ambulance services in Arizona face substantial barriers. In addition to
demonstrating their own qualifications for providing services, applicants can be required to
demonstrate that the existing ambulance service provider does not meet the provisions of its
Certificate. After the applicant submits all required information, the Department of Health
Services establishes a public hearing date and notifies all existing ambulance services in the
proposed service area. If existing services or other interested parties file an intervention, the
applicant may need to demonstrate at the hearing that the current CON holder is not ade-quately
meeting demands for service in the area.
Because the Bureau can require the applicant to demonstrate that current ambulance serv-ices
are not meeting public need, the system tends to work in favor of existing CON holders.
If existing CON holders are meeting the response times specified on their certificates, and
responding to all calls, the Department Director may decide there is no need for new serv-ice,
even if applicants can demonstrate faster response times or other service improvements.
For example, Yuma’s fire department applied to the Bureau for a CON. After a long and
controversial process, the fire department eventually withdrew its application, citing as rea-sons
the existing provider’s opposition, the lengthy and legally expensive application proc-ess,
and overall lack of support from the Bureau. Several other city fire departments are also
interested in applying for a CON but are reluctant to do so, because they expect to face
strong opposition from the current CON holders in their areas.
In addition to limitations imposed by the CON system, competition within the ambulance
industry may decrease even further because of industry changes. Specifically, the State’s
two largest private ambulance providers have merged. This merger will significantly con-centrate
the number of providers owned by one company. Currently, the merged company
holds CONs for Maricopa, Pima, and Yuma Counties as well as for other areas of the State,
and controls approximately 41 percent of the State’s registered ground ambulances. Com-bined
with the CON system, these industry changes could make it even more difficult for
new providers to enter the market.
Denies local governments a role—At the local (county or municipal) level, limiting compe-tition
through the CON system denies local governments a role in selecting ambulance pro-viders.
Local governments may be in a better position to find ambulance services that are
suitable to their communities’ needs, including the possibility of providing services through
their own fire departments.
9
CON System Should
Be Reevaluated
Given that the CON system does not meet its goals, but limits competition, other methods of
protecting public health and safety should be considered. Specifically, the Legislature
should consider whether other types of statewide or local ambulance regulation might be
more effective. Regardless of whether the Legislature maintains or eliminates the CON sys-tem,
the Bureau could improve efforts to ensure quality.
Legislative guidelines for regulation suggest that state governments consider whether the
“benefits to the public outweigh” the effects of reduced availability of services. These guide-lines
also recommend that governments provide minimum levels of regulation to meet
public need. The Legislature could consider these factors when deciding the future of the
CON system.1
The Legislature should consider other forms of regulation—A 50-state survey revealed that
only 7 states, including Arizona, use the CON system. It is more common for states to li-cense
ambulance providers. Additionally, some states supplement statewide regulation
with local regulation, allowing the county or municipality to determine the amount of serv-ice
that is appropriate for their area. These regulatory approaches allow for more competi-tion
and/or local control. For example:
n Strictly licensure—Providers are licensed by the state to offer ambulance service. The
state does not limit competition by controlling the number of ambulance providers.
Quality of services is still regulated by the state or local EMS agencies through inspec-tions
of EMT/paramedic certifications, inspections of ambulances, collection and moni-toring
of response time data, and other quality controls. States that use a similar model
include Illinois, Kansas, Montana, and Texas.
n Licensure combined with local control—The state licenses the ambulance service.
Counties determine appropriate levels of service and issue request for proposals to es-tablish
exclusive operating areas for providers through a competitive process. Quality
control measures are contained within state regulations and local plans or they are con-tained
entirely in the local plans, but are based on state guidelines. Alternatively, re-gional
councils can administer local plans. States that use a similar model include Cali-fornia,
Colorado, Oregon, and Washington.
Arizona’s Bureau of Emergency Medical Services has already implemented steps that en-hance
the duties of regional offices. If the Legislature were to remove the CON system, this
regionalization effort could be used as the first step toward increasing the regulatory
authority of local agencies over ambulance services.
1 Shimberg, Benjamin and Doug Roederer. Questions a Legislator Should Ask. The Council on Licensure,
Enforcement, and Regulation/Council of State Governments. Lexington KY, 1994.
10
Given the variety of regulatory approaches available, the Legislature may want to direct the
Bureau to form a study group to advise it on the future of Arizona’s ambulance regulatory
system. Any study group should be composed of a wide variety of stakeholders, including
regulators and governmental ambulance and rescue service providers, as well as represen-tatives
of the for-profit ambulance industry.
If the CON is continued, quality and coverage oversight could be improved—Regardless of
whether the Legislature continues the CON system, the Bureau should improve its efforts to
monitor quality by:
n More thoroughly using the regulatory mechanisms that are part of the CON, such as the
power to revoke or suspend a CON or deny a CON renewal, to monitor quality.
n Updating and improving response time measures, and holding providers accountable
for these response times. The Bureau may also develop and systematically monitor other
quality measures.
n Creating easily accessible documentation that lists or maps information contained in the
CON about provider service areas and response times. Other emergency agencies can
use this information to verify that they dispatch the appropriate and/or nearest ambu-lance
service.
Recommendations
1. The Legislature should consider directing the Bureau to form a study group to evaluate
possible changes in the manner in which Arizona regulates ambulance services. This
group should study various options, including the following:
a. Licensing providers to ensure quality, without limiting competition by controlling
the number of providers; or
b. Licensing providers and allowing local governments to establish operating areas
through a competitive process.
2. Whether or not the CON system is continued, the Bureau should use its regulatory
authority to enforce quality controls such as response times.
3. The Bureau should assemble the information it has regarding providers and their service
areas into easily accessible lists or maps so that this information can be used by other
agencies.
11
FINDING II
THE BUREAU DOES NOT ADEQUATELY
HANDLE COMPLAINTS
The Bureau’s system for investigating and resolving complaints against EMTs, paramedics,
ambulance companies, and related entities needs further improvements. Since August 1998,
the Bureau has taken steps to ensure final resolution decisions are made in a more timely
manner. However, the Bureau continues to have systematic problems in how it handles in-formal
and formal complaints, including a lack of appropriate staff training, long delays,
inadequate file tracking, and an inappropriate computer tracking system. The Bureau rec-ognizes
many of these problems and is beginning to make further improvements in some
areas.
Current Complaint-
Handling Process
Under A.R.S. §36-2204 and §36-2245, the Bureau is responsible for investigating and resolv-ing
complaints against EMTs, paramedics, ambulance companies, emergency personnel
training programs, and hospitals that oversee the work performed by EMTs and paramed-ics.
Complaints against individuals include such matters as substandard patient care and
unprofessional conduct, while complaints against ambulance companies include billing
disputes, response times, and territorial infringement.
The Bureau’s complaint-handling process differs according to the nature of the complaint.
Bureau staff informally handle some complaints, including non-patient care complaints
against ambulance companies, hospitals that oversee emergency medical personnel, and
training programs. The Bureau does not maintain a log or written reports regarding com-plaints
handled informally. In contrast, all complaints against EMTs or paramedics, com-plaints
involving patient care allegations, and appealed informal complaints are handled
formally, under the following steps:
n Bureau staff refer the complaint to the Department of Health Services’ Office of Special
Investigations.
n The Office of Special Investigations logs the complaint and investigation information
into its Complaint Tracking System database.
n The Office of Special Investigations conducts interviews and other investigative activities
and prepares a report containing all pertinent information.
12
n The complaint and investigative report are submitted to the Bureau’s Medical Director
or Bureau Chief for a hearing, if necessary, and resolution.
The Bureau has a wide range of options for formal complaint resolution, including no ac-tion,
censure, civil penalties, probation, requiring additional training, and suspending or
revoking licenses.
Some improvement since 1988 audit report—Although problems remain, the Bureau’s cur-rent
complaint-handling process includes some improvements since the Office of the Audi-tor
General’s last report in 1988 (Auditor General Report No. 88-12). That report noted se-vere
problems, including the lack of any system for tracking complaints and the failure to
investigate or take action on even serious patient care complaints. The current audit found
that although timeliness remains a problem and other improvements are still needed, prog-ress
has resulted from the Bureau’s current practice of referring certain types of complaints
to the Office of Special Investigations, and the Office’s consistent, formal approach to com-plaint
tracking, investigation, and reporting. Furthermore, in contrast to the 1988 findings
showing that few actions were taken, the Bureau took action to revoke, suspend, or other-wise
decertify 26 licensees between fiscal years 1993 and 1998. Likewise, it placed 18 licen-sees
on probation during the same period.
Final Resolution Decisions
Delayed in the Past
Although since August 1998 the Bureau has taken steps to ensure final resolutions are not
unnecessarily delayed, previous delays compromised the Bureau’s ability to resolve com-plaints
and in some cases impose appropriate discipline.
The Bureau was slow to make final resolution decisions on a significant number of com-plaints
prior to August 1998. For example, Auditor General staff found 22 complaints that
were open for more than two-and-one-half years, and in which the complaint investigations
were completed in a timely manner. However, the files were held awaiting a final decision
for an average of more than two years. These cases were finally closed when a new interim
Bureau Chief reviewed the case backlog and took action.
These delays negatively impacted the Bureau’s handling of complaints. For example, the
Bureau did not resolve 8 complaints that included a total of 21 separate allegations. These
allegations included failure to dispatch ambulances closest to the scene, and that substan-dard
care resulted in patient deaths. By the time the cases were discovered, up to four years
had elapsed since the investigations were completed. The interim Bureau Chief closed the
complaints without taking punitive action. In at least one of the cases, this lack of action was
directly attributed to “the considerable period of time that has passed.”
13
Other Complaint-Handling
Problems Still Exist
The Bureau’s handling of complaints continues to be hampered by other factors. Informal
complaints are hampered by the lack of monitoring and by the lack of training for staff who
handle these complaints. Formal complaints are hampered by long delays, inadequate file
tracking, an inadequate computer system, and insufficient communication with complain-ants.
Informal complaints not tracked and most staff not trained—The Bureau’s handling of in-formal
complaints has been hampered by a lack of tracking. The Bureau does not note the
complaint or resolution in a centralized database or log. As a result, management cannot
determine whether these complaints are resolved in a timely manner and cannot monitor
the quality of investigations or ensure that problematic providers are easily identified. While
informal resolution is appropriate for some complaints, and in fact is required by statute
A.R.S. §36-2245(E) for complaints involving ambulance company rates and charges, the Bu-reau’s
failure to track such complaints prevents it from ensuring that such complaints are
handled appropriately or from discerning repeated problems or industry-wide trends.
Lack of tracking is also a problem because the Bureau cannot assess its compliance with
timeliness standards established in statutes for some of these complaints. A.R.S. §36-2245
contains specific processing deadlines for complaints against ambulance companies. For
example, the Bureau must respond to a complainant within 15 days after receiving a written
complaint, determine if the complaint has merit within 45 days of receiving ambulance
company records, and notify all parties within 5 days if a complaint is resolved. However,
when informal complaints are investigated and resolved by Bureau staff, they are not en-tered
into the Bureau’s complaint tracking system or tracked otherwise, so that the Bureau’s
compliance with the statutory deadlines cannot be monitored.
A second problem is that informally handled complaints may not receive the same level of
investigative expertise as formal complaints. Bureau staff who handle informal complaints
have not received formal training in complaint investigation. As a result, they may not be
optimally knowledgeable about interviewing complainants, identifying potential evidence,
and drawing legally defensible conclusions. In contrast, formal complaints are investigated
by the DHS Office of Special Investigations, whose certified investigator has received na-tionally
recognized training in investigating complaints.1
1 The Council on Licensure, Enforcement, and Regulation (CLEAR) provides investigators/inspectors
training specifically for licensing and regulatory boards. CLEAR’s National Certified Investiga-tor/
Inspector Training curriculum offers training in interviewing techniques, evidence development,
administrative law, and report writing.
14
Formal system also contains problems—The Bureau also continues to have problems han-dling
formal complaints. Specifically, formal complaint-handling problems include:
n Slow complaint handling—While the Bureau has made progress since the 1988 Audi-tor
General’s report, this audit found that many complaints were still not resolved in a
timely manner. The Bureau has not established target time frames for complaint resolu-tion,
but like other medical regulatory boards in Arizona, it should be able to resolve
complaints within 180 days. However, the Bureau does not meet this standard. The
analysis covered complaints received during fiscal years 1992-93 through 1997-98. Dur-ing
the six-year period reviewed, the Office of Special Investigations investigated 152
complaints against ambulance companies and 135 other complaints, and conducted 73
recertification background checks.1 As shown in Table 2 (see page 15), about 40 percent
of all complaints required more than 180 days to resolve. Additionally, although Bureau
officials regard patient care complaints as the most important, 33 complaints required
more than 180 days to complete. Four of these complaints took more than 720 days, or
almost two years, to complete.
n Complaint file custody not adequately tracked—Once the Office of Special Investiga-tions
returns complaint files to the Bureau, the locations of the files are not adequately
tracked. For example, during the course of the audit, Bureau staff were initially unable to
provide six complaint files to auditors because the files were in the custody of different
staff than those originally thought to have them. Some of these complaints included se-rious
allegations, including patient care problems and impersonation of an EMT. Al-though
all files were eventually located and provided to audit staff, even a temporary
loss can cause problems.
Complaint files need to be consistently tracked and their location known. They serve as
the sole repository for investigation reports, interview results, and supporting docu-mentation,
so loss of a file can seriously compromise the Bureau’s ability to appropri-ately
resolve complaints in a timely manner. Despite the importance of complaint files,
the Bureau still lacks practices to track them. It does not have a formal process for trans-ferring
custody of files among Bureau staff, and its tracking system does not flag com-plaints
when they reach an excessive age to alert staff that files may be misplaced or lan-guishing
in the process.
n Computer tracking system inadequate—The computerized complaint tracking sys-tem
database used for tracking the Bureau’s formal complaints is inadequate for the Bu-reau’s
needs. This complaint tracking system was developed for use by another DHS
division and has not been modified to fit the requirements of the Bureau’s complaints.
1 Background checks are initiated when the Bureau receives information suggesting it may not be appropri-ate
to renew an individual’s certification. According to Bureau staff, these allegations typically come from
coworkers who believe the individual to be incompetent or unreliable.
15
Some critical fields are either missing or do not apply to Bureau complaints.For exam-ple,
the complaint tracking system does not track statutory processing deadlines for
complaints against ambulance companies.
The complaint tracking system also makes it difficult to monitor different types of inves-tigations.
It does not distinguish among the different types of investigations (initial certi-fication
and recertification background investigations, complaints against EMTs and
paramedics, and complaints against ambulance companies). Therefore, users cannot
easily query it for basic certification, recertification, or complaint-handling trends or sta-tistics.
Table 2
Department of Health Services
Bureau of Emergency Medical Services
Days Needed to Resolve Complaints
Years Ended June 30, 1993 through 1998
Days Type of Complaint
to
Resolve 1 Recertification Ambulance All Other
Total
Complaints
Percentage of
Resolutions by
Number of Days
0-180 52 93 70 215 60%
181-360 16 19 31 66 18
361-720 5 19 27 51 14
Over 720 0 21 7 28 8
Total 73 152 135 360 100%
1 Resolution calculated from the date the complaint is received to its closure.
Source: Auditor General staff analysis of Department of Health Services, Bureau of Emergency Medical
Services’ Complaint Tracking System data for years ended June 30, 1993 through 1998.
Complainants dissatisfied with process—The Bureau’s complaint-handling process and
untimely complaint resolution has caused complainant dissatisfaction, according to com-plainant
letters and interviews. For example, one complainant wrote a letter to DHS investi-gators
stating the following about the amount of time needed to address the complaint:
“It appears…you did little actual investigation into the incident despite the extensive time
you took….I would have presumed that, given the amount of time you had to conduct your
investigation it would have been more thorough. I am disappointed and believe that if this
simple matter took this long (and produced this little) then someone needs to take a closer look
at this agency.”
16
Further, although the Bureau complies with A.R.S. §36-2245, which requires it to notify
complainants that their written complaints have been received and are being investigated, it
does not adequately keep consumers informed throughout the complaint process. In some
cases, complainants do not receive any further information until the Bureau notifies them
that their complaint has been closed.
Bureau Beginning to
Make Some Improvements
The Bureau has recognized some of these complaint-handling problems and is beginning to
make improvements, although additional work is needed. The Bureau plans to implement a
new case management plan, which includes policies and procedures for complaint han-dling.
Further, the Bureau and the Office of Special Investigations have recognized the need
for an improved complaint-tracking system and are taking steps to resolve some of these
problems. However, additional changes are required to correct problems.
Bureau plans to implement new case management plan for formal complaints—In order to
address problems with complaint handling, the Bureau is currently drafting a new case
management plan. This plan covers all aspects of complaint handling, including receiving
and processing complaints, complaint tracking, and file location. As part of this new ap-proach,
the Bureau has hired an ombudsman. This position’s duties will include receiving,
routing, and tracking complaints from receipt to resolution. Bureau management believes
this position will help the Bureau route complaints to the appropriate investigator or staff
person, track complaint progress, and ensure complaints are resolved in a timely manner.
The plan also establishes a standard of 180 days to resolve complaints.
Need for improved complaint-tracking system identified—Both the Bureau and the DHS
Office of Special Investigations recognize the need for an improved complaint-tracking sys-tem.
For example, an improved system could capture processing deadlines mandated by
A.R.S. §36-2245 for informal complaints against ambulance companies, “flag” complaints
that are not progressing, and allow staff to easily obtain critical information and trends
through data queries.
The Office of Special Investigations is currently considering its needs and investigating both
commercially available software and complaint-tracking systems used by other Arizona
investigative agencies. Until a new computerized tracking system is identified and pur-chased,
the Bureau and Office of Special Investigations are conducting bi-weekly meetings
to manually track complaints and ensure they are resolved in a timely manner.
Although the Bureau’s plans to improve complaint handling represent an improvement,
DHS should make it a priority to follow through on these plans, and monitor the effect of
these changes. Also, in addition to the improvements covered by the plan, the Bureau
17
should require that informal complaints be entered into the complaint tracking system for
monitoring purposes and address staff training needs.
Recommendations
1. The Bureau should continue to develop and eventually adopt its case management plan,
including the standard of resolving complaints within 180 days.
2. The Bureau should continue efforts to identify and eventually obtain the type of com-plaint-
tracking database needed and available. Specifically, this database should include
key fields to handle complaints unique to the emergency medical service industry, track
statutory time frame processing requirements, identify the current location of complaint
files, and differentiate between types of investigations.
3. The Bureau should develop a mechanism to note information on informally handled
complaints. At a minimum, this information should be used to ensure that the Bureau
meets statutory processing deadlines for ambulance company complaints, handles in-formal
complaints appropriately, and identifies industry-wide problems.
4. The Bureau should provide investigative training for staff who handle informal com-plaints.
5. The Bureau should develop procedures for transferring and tracking complaint files, to
ensure that their location is always known and the cases do not languish.
6. The Bureau should provide complainants an explanation of the complaint-handling pro-cess
and periodically update the status of their complaints.
18
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19
OTHER PERTINENT INFORMATION
During the audit questions arose as to whether the Bureau’s former Medical Director had a
potential conflict of interest and, if so, whether it affected the Bureau’s handling of regula-tory
matters.
Questions were raised regarding whether the former Medical Director had a potential con-flict
of interest as a result of her husband’s employment with an ambulance company. Be-cause
statutes require the Medical Director to be an active emergency physician, all Bureau
Medical Directors face conflict situations when their decisions would affect the hospitals
they work in, and as a result they must recuse themselves from such decisions. The official
in question had a wider range of potential conflicts, since her husband’s company and its
competitors provide much of the ambulance service in the State. Although the Bureau did
not consistently follow its own policies regarding this official’s participation in decisions, the
Auditor General staff’s review of available files revealed no inappropriately resolved com-plaints.
Former Medical Director faced potential conflict of interest—Industry representatives, De-partment
personnel, and legislative staff raised questions during the audit regarding
whether the Bureau’s former Medical Director had a potential conflict of interest. The official
in question served from November 1, 1993, until her resignation effective October 30, 1998.
Questions arose because beginning in 1994, her spouse worked for the State’s largest for-profit
ambulance service provider.
Under state statutes and Bureau procedures, the Medical Director is responsible for many
aspects of regulating the emergency services industry, such as reviewing complaints against
ambulance companies, emergency medical technicians, and paramedics. Additionally, the
Medical Director consults on virtually every aspect of the Bureau’s activities. These respon-sibilities
placed the former Medical Director in the position of making decisions that could
potentially impact or be impacted by her spouse’s employer.
Bureau did not consistently follow its policy—In response to this potential conflict, the Bu-reau
obtained legal advice in 1995. The Bureau’s Attorney General representative advised
that the former Medical Director did not have a legal conflict of interest because her hus-band
did not hold a financial interest in his employer’s company. However, the attorney
recommended exercising caution because there could be an appearance of conflict of inter-est,
which could expose her to scrutiny and criticism. As a result, the Bureau wrote an inter-nal
policy directing the former Medical Director to refrain from reviewing any complaints
against her husband’s employer or any of its competitors, including complaints against in-dividual
employees of such companies. According to the policy, “None of these items
should be routed to” the former medical director, and she should review copies of public
records on matters covered by the policy only after the record became public.
20
The Bureau did not consistently follow its own policy for handling the potential conflict of
interest. First, the Bureau continued to route some complaints to the former Medical Direc-tor
that involved companies or employees affected by the policy. For example, she resolved
some complaints against individual emergency medical technicians and paramedics em-ployed
by the affected companies. According to the former Medical Director, the Attorney
General representative verbally approved her participation in each of these cases (current
and former attorneys recall these conversations). In addition, in all such cases reviewed by
Auditor General staff, another Bureau or Department official also reviewed the case and
came to the same conclusion as the former Medical Director. However, according to the
policy, these cases should not have been submitted to the former Medical Director at all.
Second, although the policy required the Bureau to compile a list of affected ambulance
companies every quarter, the Bureau compiled only two such lists. According to the former
Medical Director, the list would not have changed so there was no need to follow the policy
and create new lists.
Department reports attempts to avoid similar situations—To avoid this situation in the
future, the Department of Health Services reports that it now closely scrutinizes potential
conflicts of interest prior to hiring Bureau managers. For example, both the Bureau’s new
Medical Director and Bureau Chief’s potential conflicts of interest were reportedly reviewed
prior to their hiring. Additionally, Auditor General staff reviewed their conflict-of-interest
statements. The new Bureau Chief relocated to Arizona and, therefore, has no potential con-flicts.
The new Medical Director has only a limited potential conflict because he is a licensed,
practicing emergency medicine physician. This is consistent with statutory requirements
placed on the part-time, Medical Director’s position. As a result, both Bureau managers
should be able to impartially perform their duties.
Agency Response
(This Page Intentionally Left Blank)
Leadership for a Healthy Arizona
Office of the Director
1740 W. Adams Street JANE DEE HULL, GOVERNOR
Phoenix, Arizona 85007-2670 JAMES R. ALLEN, MD, MPH, DIRECTOR
(602) 542-1025
(602) 542-1062 FAX
Mr. Douglas R. Norton, CPA
Auditor General
Office of the Auditor General
2910 North 44th St., Suite 410
Phoenix, AZ 85004
Dear Mr. Norton:
Thank you for the opportunity to review the report of the Performance Audit, conducted as part of
the Sunset Review set forth in A.R.S. §41-2951 through 41-2957, of the Arizona Department of
Health Services (ADHS), Bureau of Emergency Medical Services.
The findings and recommendations contained in your report have been carefully reviewed by the
staff of ADHS, and in accordance with the instructions contained in your letter of April 2, 1999, the
enclosed response is provided.
ADHS greatly appreciates the hard work and professionalism shown by your staff during the conduct
of their audit. We also appreciate the insights provided by your staff during the audit process and
through the audit’s findings and recommendations. From the knowledge gained as a result of your
efforts, we will be able to significantly improve the work processes that relate to the certification and
regulation of emergency medical services. As a result, we will be able to better serve both the
regulated community and consumers of emergency medical services within the State of Arizona.
Sincerely,
James R. Allen, M.D., M.P.H.
Director
JRA:SPH:df
Enclosure
Page 1 of 7
ADHS Response to the Performance Audit on
the Bureau of Emergency Medical Services
Overview:
The Arizona Department of Health Services (ADHS) agrees in general with the recommendations and
conclusions of the audit team.
We feel it is important to point out that Finding I relates to a legislatively mandated activity. We
recognize there are other ways used in other states to regulate ambulance services; the CON process
has been prescribed by state lawmakers as the method for use in Arizona.
With respect to Finding II, ADHS management had recognized the need for improvement, and had
undertaken major steps toward overall improvement as well as developing specific strategies for the
issues identified within the report. Already, significant changes had been made in the leadership,
structure and operations of the Bureau:
$ The Bureau has been changed from a centralized organization of specialists to a regionalized
organization of generalists. This change allows for improved relations and communication with
our regulated clients.
$ A new Medical Director, Bureau Chief, and Paralegal Investigator have been hired.
These changes should be seen as a major and ongoing commitment on the part of ADHS to address the
findings cited in the report and to improve upon the Bureau=s ability to serve and protect the public.
Finding I - AThe Certificate of Necessity is an Unnecessary Form of Regulation@
(A) Current Approach Does Not Meet Goals and Is Unnecessary
This section of the report comments upon the existing Certificate of Necessity approach to approving
ambulance operations. Specifically:
CONs do not guarantee coverage - The report finds that some areas of the state are not covered, and
that ADHS cannot compel providers to offer service in remote or unprofitable areas. While we are
aware this is true, we do not know of a system that is able to accomplish this. In any system there are
some areas that simply cannot support ambulance services. These reasons may be economic in part, but
it is also difficult to attract and retain qualified personnel for an ambulance service with a paucity of
calls. In order to address some of the problems faced by certain areas within Arizona, ADHS is
supporting legislation to allocate funding for the improvement of rural emergency medical services.
This section also raises a concern about whether ADHS has assured that the Department of Public
Safety (DPS) has correct and current information on the location and capabilities of ambulance
Page 2 of 7
providers. While we can provide DPS with such information, ambulance dispatching is conducted
under the color of local authority, not through DPS.
Unregulated services and costly air ambulances fill the gap - The report finds that rescue and air
services are often used in place of ambulances for areas that have inadequate ambulance coverage.
ADHS shares the concern of the auditors that rescue vehicles occasionally and perhaps improperly
cross the line into the provision of ambulance service. While this may be symptomatic of unmet need,
there are also local political issues at play. ADHS will consider approaches to integrate rescue services
and personnel into the emergency medical services system.
Upon completion of the new ground ambulance rules, the Bureau will begin working on drafting new
regulations for air ambulance services. Opportunities exist within that context for developing air
ambulance utilization criteria.
CONs ineffective for ensuring quality - The observation is made that the CON system does not meet its
goal of assuring quality services because the Bureau does not routinely conduct analyses of response
time data. We recognize opportunities exist to improve upon this. Response time is not uniformly
calculated nor reported. It is important to note the Bureau is taking measures now, in concert with the
EMS community, to establish a regulatory definition of Aresponse time.@ A second critical step is the
establishment of electronic reporting of this data to facilitate its analysis. We are considering all
options in regard to electronic reporting.
It is also important to recognize that response time alone is an inadequate expression of quality. The
total amount of time between the event and the administration of definitive care at a hospital may be
meaningful to patient outcome, but the ambulance response time is a single parameter within this
timeframe (See table 1. below.) ADHS is committed to finding more effective and reliable ways to
evaluate quality.
Table 1.
System Reaction Time Total Run Time Care Time
Access Time Processing Time Response Time Scene Time Transport Time Definitive Care
Time
Access Time is the amount of time between the event and the call for help.
Processing Time is the amount of time between the call for help and when the ambulance is dispatched.
Response Time is the amount of time between when the ambulance is dispatched and when the ambulance arrives on the
scene.
Scene Time is the amount of time between when the ambulance arrives on the scene and when the ambulance departs the
scene.
Transport Time is the amount of time between when the ambulance departs the scene and when the ambulance arrives at
its destination.
Definitive Care Time is the amount of time between when the ambulance arrives at the facility, and definitive care is
rendered.
Page 3 of 7
CONs unnecessary for ensuring quality and regulating fees - The report finds that ambulance service
quality and charges could be regulated without the CON system. Certainly other methods for
evaluating service quality or establishing rates could be used with or instead of the CON process. The
regulation of fees has been coupled with the CON process because the CON describes a population
base within a distinct geographic area. This facilitates the ability to accurately project costs and
revenues and to determine appropriate rate structures.
(B) CON System Limits Competition
This section of the report comments upon the effect of CON on the market. Specifically:
CON System creates a barrier to entering the market - The observation is made that CON makes it
difficult for new services to enter the market and discourages competition. The CON process is built, in
part, on the premise that entities will be willing to provide services in otherwise economically
unattractive areas, if they are guaranteed that there will be limited or no competition in the particular
market as a result of (1) limitations in the awarding of CONs and (2) service restrictions on those
entities not awarded a CON (for the particular area) who would otherwise have been competitors. The
concept is that Aguaranteed@ market control over a service area can create sufficient economic incentive
for a private entity to be willing to furnish services. Obviously, the incentive would be even stronger if
Amarket control@ involved the independent setting of fees by the CON holder as opposed to the rate
regulation done by the Bureau (and, in effect, by third party payors).
Denies local governments a role - The report states the CON process denies local governments a role
in selecting ambulance providers, when they may be in a better position to determine their community=s
needs. Local governments can choose to pursue a CON, but the decision-making authority rests
exclusively with the state in the CON model for the ostensible reason that the state is in the best
position to assure the complete integration of the provider community into a statewide EMS system.
(C) CON System Should Be Reevaluated
This section of the report suggests a more effective means of regulation should be considered.
Specifically:
The Legislature should consider other forms of regulation - Should the legislature choose to pursue
this we will assist in any way possible.
If the CON is continued, quality and coverage oversight could be improved - The report finds that
quality could be improved through increased use of the authority to revoke or suspend, holding
providers accountable to response time, and creating documentation that lists or maps information
about provider service areas and response times. We agree that quality should be continually improved,
but as previously mentioned, response time is only one aspect of that. ADHS is considering all options
Page 4 of 7
in developing improved quality and outcome monitoring.
Finding I Recommendations
1. AThe Legislature should consider directing the Bureau to form a study group to evaluate
possible changes in the manner in which Arizona regulates ambulance services. This group
should consider various options, including the following:
a. Licensing providers to ensure quality, without limiting competition by controlling the
number of providers; or
b. Licensing providers and allowing local governments to establish operating areas
through a competitive process.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented pending approval from the Governor and/or the Legislature before
proceeding.
2. AWhether or not the CON system is continued, the Bureau should use its regulatory authority to
enforce quality controls such as response times.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
3. AThe Bureau should assemble the information it has regarding providers and their service areas
into easily accessible lists or maps so that this information can be used by other agencies.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
Finding II - AThe Bureau Does Not Adequately Handle Complaints@
(A) Final Resolution Decisions Delayed In the Past
This section of the report comments upon the Bureau=s ability to resolve complaints and in some cases
impose appropriate discipline. Specifically, the observation is made that some complaints were open
for an extended period of time even though the investigations had been concluded. The report also
mentions that the majority of cases have been handled promptly, and that the Bureau has made
significant improvements since the last audit.
The new Bureau Chief is certified by the Council on Licensure, Enforcement and Regulation as an
investigator. The new Bureau Chief=s background and certification will prove valuable as the Bureau
seeks to improve its training and investigative procedures. In addition, a Paralegal Investigator has now
been hired by the Bureau to manage and track complaint investigations.
Page 5 of 7
(B) Other Complaint-Handling Problems Still Exist
This section of the report finds the Bureau to be hampered by other problems. Specifically:
Informal complaints not tracked and most staff not trained - The auditors observe that lack of an
effective tracking methodology may prevent it from ensuring complaints are handled appropriately or
discovering industry-wide trends. A further observation is made that the staff handling informal
complaints have no formal investigative training. A new complaint-tracking procedure is under
development, planning for a computer-based complaint tracking program is under way, and the new
Paralegal Investigator works directly with the Bureau Chief and the Medical Director in conducting
investigations.
Formal system also contains problems - Four observations are made: slow complaint handling,
complaint files custody inadequately tracked, inadequate computer tracking system, and complainants
are dissatisfied with the process.
The report finds that the majority of complaints were handled in a timely fashion. Up to 22% of the
investigations may have taken more than one year to complete, and 8% took considerably longer. It
must be recognized that while ADHS agrees improvement is needed, some cases are extremely
complicated, necessitating interagency coordination, interviews with uncooperative or hard to locate
witnesses, or a need to await the outcome of related legal proceedings. In some instances, because of
pending legal action or other considerations, a rapidly concluded investigation does not guarantee
timely resolution and closure of a case.
The report indicated six complaint files were initially difficult to locate. On November 19th, a request
was made that these six files be located by November 25th. The location of these files was determined
and made known to the audit team on November 20th.
The report finds that the current computer complaint-tracking system makes it difficult to monitor
different types of complaints, and does not track statutory deadlines. We are aware of this and are
actively engaged in replacing this system.
Complainants have expressed dissatisfaction with complaint-handling, and are not informed
throughout the complaint process. The new case-management system will address this need.
We expect that the new Paralegal Investigator will significantly reduce the workload of investigations
being handled by OSI, and the development of appropriate software will significantly improve
operations.
(C) Bureau Beginning to Make Some Improvements
This section of the report recognizes some of the Bureau=s efforts to improve. Specifically, the
development of the new case management plan, the semimonthly status meetings, the addition of the
Page 6 of 7
Paralegal Investigator (ombudsman) and the identification of the need for improved computerized
complaint tracking are recognized.
Finding II Recommendations
1. AThe Bureau should continue to develop and eventually adopt its case management plan,
including the standard of resolving complaints within 180 days.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
2. AThe Bureau should continue efforts to identify and eventually obtain the type of complaint-tracking
database needed and available. Specifically, this database should include key fields to
handle complaints unique to the emergency medical service industry, track statutory timeframe
processing requirements, identify the current location of complaint files, and differentiate
between types of investigations.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
3. AThe Bureau should develop a mechanism to note information on informally handled
complaints. At a minimum, this information should be used to ensure that the Bureau meets
statutory processing deadlines for ambulance company complaints, handles informal complaints
appropriately, and identifies industry-wide problems.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
4. AThe Bureau should provide investigative training for staff who handle informal complaints.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
5. AThe Bureau should develop procedures for transferring and tracking complaint files, to ensure
their location is always known and the cases do not languish.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
6. AThe Bureau should provide complainants an explanation of the complaint-handling process
and periodically update the status of their complaints.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
Page 7 of 7
AOther Pertinent Information@
This section of the report contains no findings, but comments upon an alleged conflict of interest on the
part of the past Medical Director of the Bureau. It is observed that the previous Medical Director was
placed by her work responsibilities in the position of making decisions that could potentially impact or
be impacted by her spouse=s employer.
ADHS is pleased that the Auditor General recognizes the fact that no actual conflict ever arose as a result
of the former Medical Director=s ties with the provider community. The facts demonstrate that in
practice, the Bureau adopted a self-policing approach to the problem.

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State of Arizona
Office
of the
Auditor General
PERFORMANCE AUDIT
Report to the Arizona Legislature
By Douglas R. Norton
Auditor General
DEPARTMENT OF
HEALTH SERVICES,
BUREAU OF
EMERGENCY
MEDICAL
SERVICES
April 1999
Report No. 99-6
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DOUGLAS R. NORTON, CPA
AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
DEPUTY AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
April 19, 1999
Members of the Arizona Legislature
The Honorable Jane Dee Hull, Governor
Dr. James Allen, Director
Department of Health Services
Transmitted herewith is a report of the Auditor General, A Performance Audit of the
Department of Health Services, Bureau of Emergency Medical Services. This report is
in response to a May 27, 1997, resolution of the Joint Legislative Audit Committee. The
performance audit was conducted as part of the Sunset review set forth in A.R.S. §§41-
2951 through 41-2957. This is the third in a series of reports to be issued on the
Department of Health Services.
This report addresses why the State needs to consider changing its current statutory
approach to regulating ambulance services, how the Bureau can improve its handling of
complaints against various certificate holders, including emergency medical
technicians, and how the Department handled the Bureau’s former Medical Director’s
potential conflict of interest. First, Arizona’s statutory Certificate of Necessity (CON)
system provides more regulation than is necessary for overseeing ambulance service,
does not meet its goals, and limits competition. We recommend that the Legislature
consider directing the Bureau to form a study group to advise the Legislature on
developing a new system for helping to ensure quality service, while increasing the
potential for competition within the industry. Second, the Bureau has taken steps since
August 1998 to ensure that complaints against certificate holders are resolved more
quickly. However, it still needs to improve complaint handling by providing adequate
staff training, expediting some complaint resolutions, adequately tracking complaint
files, and adopting an appropriate computer-tracking system. Finally, the report also
provides information about how the Department handled the Bureau’s former Medical
Director’s potential conflict of interest.
April 19, 1999
Page -2-
As outlined in its response, the Department notes that the decision to review the need
for the CON system rests with the Legislature. The Department agrees with, and has
agreed to implement, all recommendations addressed to it.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on April 20, 1999.
Sincerely,
Douglas R. Norton
Auditor General
Enclosure
i
SUMMARY
The Office of the Auditor General has conducted a performance audit of the Department of
Health Services, Bureau of Emergency Medical Services, pursuant to a May 27, 1997, resolu-tion
of the Joint Legislative Audit Committee. The audit was conducted under the authority
vested in the Auditor General by A.R.S. §§41-2951 through 41-2957. This is the third in a
series of six audits relating to the Department of Health Services.
The Bureau of Emergency Medical Services (Bureau) is responsible for protecting the health
and safety of people requiring emergency medical services. With 34 full-time equivalent
positions located in one administrative and four regional offices, the Bureau certifies emer-gency
medical technicians, regulates ambulance service through the statutory Certificate of
Necessity (CON), and handles complaints against individuals and ambulance companies.
The Bureau also oversees statewide emergency medical services by administering a com-puterized
database of trauma cases and supporting three advisory boards and four regional
councils.
The Certificate of Necessity Is
An Unnecessary Form of Regulation
(See pages 5 through 10)
This audit found that the statutory Certificate of Necessity (CON) provides more regulation
than is necessary for overseeing ambulance service and limits competition. Arizona’s cur-rent
system of regulation dates from 1982 and is generally intended to ensure ambulance
coverage throughout the State and to provide assurance of quality services. It statutorily
requires that companies or local governments obtain a Certificate of Necessity to operate an
ambulance service in each geographic area they intend to serve. Arizona is one of only
seven states using a CON system for ambulance regulation.
The CON system does not guarantee that all areas of the State have adequate ambulance
coverage or that CON holders provide quality service sufficient to meet basic safety re-quirements.
Some locations in the State are not in any provider’s service area. Under the
CON system, the Bureau has no authority to compel providers to provide service to these
locations. Examples include Highway 89 from Flagstaff to Page and Highway 93 from
Wickenburg to Wikieup. As a result, unregulated rescue services and costly air ambulances
are often used in place of ambulances in those and other areas that have inadequate cover-age.
Even within CON service areas, the system is ineffective for ensuring quality. The Bu-reau
does not systematically monitor key quality indicators, including ambulance response
times. Furthermore, quality can be monitored without a CON system. Arizona has several
regulations for controlling the quality of ambulance services that are separate from the CON
system.
ii
The Certificate of Necessity system limits competition by creating a barrier to those indi-viduals
or companies wishing to enter the ambulance service market. In addition to demon-strating
their own qualifications, CON applicants can be required to demonstrate that the
existing ambulance service provider does not meet the provisions of its CON. If existing
CON holders are meeting the response times specified on their certificates and responding
to all calls, the Department may decide there is no need for new service, even if applicants
can demonstrate faster response times or other service improvements. The CON system also
prevents local governments from finding ambulance service that might better and more
affordably meet their communities’ needs, including possibly providing services through
their own fire departments.
The Legislature could consider directing the Bureau to form a study group to advise it on
the need to reevaluate the CON system in light of its limitations in meeting state regulatory
goals and its adverse impact on competition. Other forms of regulation used by other states
might be effective without the problems that accompany the CON system. For example, the
Department could license and regulate the quality of ambulance service without limiting the
number of providers, or the Department could establish minimum service standards and
allow local governments to determine appropriate levels of service.
If the CON is continued, quality and coverage oversight should be improved. The Bureau
could more thoroughly use CON regulatory mechanisms to monitor quality, update and
improve response time measures and accountability, and create easily accessible documen-tation
of provider information.
The Bureau Does Not Adequately
Handle Complaints
(See pages 11 through 17)
Although the Bureau’s current complaint-handling process has improved since the Office of
the Auditor General’s last report in 1988 (see Auditor General Report No. 88-12), the Bureau
still needs to improve its handling of complaints against emergency medical technicians,
paramedics, ambulance companies, and related entities. Under A.R.S. §36-2204, the Bureau is
responsible for investigating and resolving complaints of substandard patient care and un-professional
conduct against emergency medical technicians; and complaints regarding fees,
response times, and territorial infringement against ambulance companies. The Depart-ment’s
Office of Special Investigations formally investigates all complaints against emer-gency
medical technicians or paramedics, complaints involving patient care allegations, and
appealed informal complaints. Other complaints are handled informally by Bureau staff.
Since August 1998, the Bureau has taken steps to ensure that final resolution decisions are
made in a more timely manner. However, Auditor General staff found that 22 complaints
from the period prior to August 1998 remained open for more than two-and-a-half years,
awaiting a final decision after the investigations had been completed in a timely manner.
iii
The delay compromised the Bureau’s ability to resolve complaints and, in some cases, im-pose
appropriate discipline.
Other problems are related to the Bureau’s procedures for handling complaints, both infor-mally
and formally. Informal complaints are hampered by a lack of monitoring and a lack of
complaint investigation training on the part of Bureau staff, who handle all such complaints.
Formal complaints continue to be hampered by slow processing, poor tracking of files, an
inadequate database, and inadequate notification provided to complainants about the status
of their cases.
The Bureau has recognized some of these complaint-handling problems and has begun to
make improvements. It plans to implement a new case management plan, which includes
policies and procedures for complaint handling. The Bureau has also recognized the need
for an improved complaint tracking system for these complaints and is taking steps to ad-dress
some of the problems. Further changes, however, are still required to correct prob-lems.
These changes include better tracking and management of complaints that are han-dled
informally, training for personnel who investigate such complaints, and better com-munications
with complainants.
Other Pertinent Information
(See pages 19 through 20)
The Bureau’s former medical director faced a potential conflict of interest because her
spouse works for the State’s largest for-profit ambulance service provider. The Bureau
sought legal direction on the matter and subsequently wrote, but did not consistently fol-low,
an internal policy directing the former medical director to refrain from reviewing any
complaints against the spouse’s employer or any of its competitors, including complaints
against individual employees of such companies. The former medical director participated
or made decisions in several complaint cases, although the audit staff found no inappropri-ately
resolved complaints. To avoid this situation in the future, the Department of Health
Services reports that it now closely scrutinizes potential conflicts of interest prior to hiring
Bureau managers. Auditor General staff reviewed the Statements of Independence of the
Bureau’s new Chief and Medical Director and found that both should be able to impartially
perform their duties.
iv
(This Page Intentionally Left Blank)
v
Table of Contents
Page
Introduction and Background........................................................... 1
Finding I: The Certificate of Necessity
Is An Unnecessary Form of Regulation ...................................... 5
The Certificate of
Necessity System.............................................................................................................. 5
Current Approach Does Not
Meet Goals and Is Unnecessary..................................................................................... 6
CON System
Limits Competition.......................................................................................................... 7
CON System Should
Be Reevaluated.................................................................................................................. 9
Recommendations............................................................................................................ 10
Finding II: The Bureau Does Not
Adequately Handle Complaints.................................................... 11
Current Complaint-
Handling Process.............................................................................................................. 11
Final Resolution Decisions
Delayed in the Past........................................................................................................... 12
Other Complaint-Handling
Problems Still Exist........................................................................................................... 13
Bureau Beginning to
Make Some Improvements............................................................................................. 16
Recommendations............................................................................................................ 17
Other Pertinent Information............................................................... 19
Agency Response
vi
Table of Contents (concl’d)
Page
Tables
Table 1 Department of Health Services
Bureau of Emergency Medical Services
Statement of Revenues, Expenditures,
and Changes in Fund Balance
Years Ended or Ending June 30, 1997, 1998, and 1999 ............. 3
Table 2 Department of Health Services
Bureau of Emergency Medical Services
Days Needed to Resolve Complaints
Years Ended June 30, 1993 through 1998.................................... 15
1
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance audit of the Department of
Health Services, Bureau of Emergency Medical Services, pursuant to a May 27, 1997, resolu-tion
of the Joint Legislative Audit Committee. The audit was conducted under the authority
vested in the Auditor General by A.R.S. §§41-2951 through 41-2957. This is the third in a
series of six audits relating to the Department of Health Services.
Bureau of Emergency Medical
Services’ Responsibilities
The Bureau of Emergency Medical Services plans and coordinates the State’s emergency
medical care system. Federal estimates indicate that the average American will need ambu-lance
service at least twice in his or her lifetime. The Bureau’s mission is to protect the health
and safety of people requiring emergency medical services through certification, licensure,
and promotion of Arizona’s emergency medical service systems.
The Bureau has three main areas of responsibility:
n Emergency Personnel—The Bureau certifies emergency medical technicians and tech-nician
training programs, handles complaints against emergency medical technicians
(EMTs), and disciplines violators. There are currently 9,044 certified basic and interme-diate
emergency medical technicians and 2,360 certified paramedics in Arizona.
n Ambulance Services—The Bureau regulates ambulance service by setting ambulance
service rates and issuing Certificates of Necessity to ambulance providers. These Certifi-cates
establish providers’ geographic service areas and required response times. The Bu-reau
also inspects all air and ground ambulances, investigates complaints against am-bulance
providers, disciplines violators, and certifies hospitals that provide medical di-rection
to ambulance providers and receive emergency patients. Currently, 74 ambu-lance
service providers hold 83 Certificates of Necessity and operate approximately 533
ambulances in Arizona.
n Statewide Oversight—The Bureau provides statewide oversight of emergency medical
services through several means. It maintains the State Trauma Registry, a computerized
database of the incidence of, causes, severity, outcomes, and operation of trauma system
cases. In addition, it provides administrative support to several advisory committees in-cluding
the State Trauma Advisory Board, the State Emergency Medical Services Coun-cil,
the Medical Direction Commission, and four regional councils. These seven bodies
2
guide the Bureau in developing policy and programs. The Bureau also administers a
grants program for emergency medical service providers to purchase supplies and
capital equipment.
Bureau of Emergency Medical Services
Organization and Staffing
The Bureau of Emergency Medical Services is a unit within the Department of Health Serv-ices,
Public Health Division. It has a total of 34 full-time equivalent employees (FTE). Four-teen
FTEs staff a Phoenix-based administrative office that regulates ambulance services
statewide and oversees a reorganized structure of four regional offices.1 The regional offices
are responsible for certification, ambulance inspection, grant making, informal complaint
handling, and some hospital oversight. The Central Region office is in Phoenix and has a
staff of 8. The Southeastern Region office, in Tucson, has 5 FTEs. The Northern Region office
is in Flagstaff and has 4 FTEs. The Western Region office is housed in Phoenix and is staffed
by 3 FTEs. The Department of Health Services supports the Bureau, particularly through the
Office of Special Investigations, which investigates formal complaints against emergency
medical technicians and ambulance providers.
Budget
The Bureau is financially supported by a portion of a surcharge on fines charged for crimi-nal
offenses and traffic violations and by 0.3 percent of the Telecommunications Services
Excise Tax. Expenditure of these monies requires legislative authorization. Table 1 (see page
3) illustrates the Bureau’s actual and estimated revenues and expenditures for fiscal years
1997-1999.
Audit Scope
and Methodology
Audit work was conducted to determine whether the Bureau effectively regulates ambu-lance
services through the Certificate of Necessity program, and whether the Bureau ade-quately
tracks, investigates, and resolves complaints. The audit presents findings and rec-ommendations
in two areas:
1 Previously, the Bureau had separate sections handling emergency personnel certification, the Certifi-cate
of Necessity program, and the statewide trauma system. The sections operated primarily from
the Phoenix office. The Tucson and Flagstaff offices employed ambulance inspectors and administra-tive
staff. The Flagstaff office also monitored hospitals who oversee emergency medical personnel.
3
Table 1
Department of Health Services
Bureau of Emergency Medical Services
Statement of Revenues, Expenditures, and Changes in Fund Balance
Years Ended or Ending June 30, 1997, 1998, and 1999
(Unaudited)
1997 1998 1999
(Actual) (Actual) (Estimated)
Revenues:
Fines and forfeits 1 $3,312,692 $3,618,552 $3,908,000
Use taxes 2 1,584,624 1,815,626 2,035,000
Total revenues 4,897,316 5,434,178 5,943,000
Expenditures:
Personal services 797,110 823,735 1,015,300
Employee related 186,391 191,227 231,900
Professional and outside services 110,621 326,912 241,200
Travel, in-state 46,609 50,232 51,500
Travel, out-of-state 4,701 6,180 5,600
Aid to organizations 3 1,874,012 2,020,204 2,028,300
Other operating 495,751 434,758 481,500
Capital outlay 392,588 199,364 166,100
Total expenditures 3,907,783 4,052,612 4,221,400
Excess of revenues over expenditures 989,533 1,381,566 1,721,600
Fund balance, beginning of year 1,844,095 2,833,628 4,215,194
Fund balance, end of year 4 $2,833,628 $4,215,194 $5,936,794
1 The Department receives a portion of fines charged for criminal offenses and traffic violations to fund
various statewide emergency medical services, including Bureau operations.
2 The Department receives 0.3 percent of Telecommunication Services Excise Tax revenue to fund the
University of Arizona Poison Control Center and poison control services in Maricopa County. This
revenue is passed through to other entities and is included in “Aid to organizations.”
3 Includes amounts passed through to other entities for poison control and grants awarded to emer-gency
medical service providers for ambulance purchases and services, emergency receiving facili-ties,
and rescue services.
4 The Department must receive legislative authorization to spend the Bureau’s fund balance.
Source: The Uniform Statewide Accounting System Revenues and Expenditures by Fund, Program, Organi-zation,
and Object and Trial Balance by Fund for the years ended June 30, 1997 and 1998; the State of
Arizona Appropriations Report for the years ended or ending June 30, 1997, 1998, and 1999; and
Division-estimated revenues and expenditures for the year ending June 30, 1999.
4
n The need for the Bureau to address problems in its regulatory approach to ambulance
service provision; and
n The need for the Bureau to improve its complaint-handling process.
Major audit methods included:
n An analysis of the electronic complaint database containing information on the 360 for-mal
complaints filed between fiscal years 1993 and 1998;1
n An in-depth telephone survey of the emergency medical services agencies of 14 states
that are geographically and demographically similar to Arizona or were identified by
emergency medical services experts;2
n A survey of the remaining 35 states regarding whether or not they have a Certificate of
Necessity system;
n A review of relevant Arizona statutes; other states’ emergency medical services agency
literature, statutes, and rules; recent legal rulings on ambulance service; and current lit-erature
on ambulance and public utility regulation and deregulation;
n An analysis of all 15 initial Certificate of Necessity applications filed between 1994-1998;
and
n Interviews with emergency medical services experts, legislative staff, a Governor’s Office
representative, five professional association representatives, Department of Public Safety
representatives, five current Certificate of Necessity holders, a rescue service provider,
and three emergency medical service providers who do not have a Certificate of Neces-sity,
but are interested in obtaining one. Industry representatives came from rural, ur-ban,
and suburban areas.
This audit was conducted in accordance with government auditing standards.
The Auditor General and staff express appreciation to the Department of Health Services
Director and the Bureau of Emergency Medical Services’ Chief, Medical Director, and staff
for their cooperation and assistance throughout the audit.
1 Database was verified through a statistical sample of 70 complaint files.
2 California, Colorado, Connecticut, Florida, Illinois, Kansas, Missouri, Montana, Nevada, New Mex-ico,
Oregon, Texas, Utah, and Washington.
5
FINDING I
THE CERTIFICATE OF NECESSITY
IS AN UNNECESSARY FORM OF REGULATION
Arizona’s Certificate of Necessity (CON) system provides more regulation than is necessary
for overseeing ambulance service. CON systems are intended to ensure ambulance coverage
throughout the State and to provide quality assurance. Arizona’s CON system does not
guarantee either of these outcomes, and further, limits competition in the provision of am-bulance
services. By limiting the ability of new ambulance services to enter a particular geo-graphic
area, the CON system may also prevent the introduction of service improvements
that would better meet a community’s needs. The system should be reevaluated, and other
forms of regulation should be considered.
The Certificate of
Necessity System
Arizona’s current system for regulating ambulance services dates from 1982, when voters
approved a Constitutional amendment to reinstate ambulance regulation. The resulting
amendment provides for the Legislature’s regulatory authority over ambulances in “all
matters relating to service provided, routes served, response times and charges.”1 To fulfill
this authority, the Legislature enacted statutes establishing the CON system. Only seven
states, including Arizona, now use a CON system for ambulance regulation.
Under A.R.S. §36-2233, companies or local governments must apply to the Bureau for a
Certificate of Necessity to operate an ambulance service in each geographic area they intend
to serve. Applicants must meet criteria demonstrating that they are qualified to offer service.
The Department must also find public need for the service, based on demand and the effect
upon any existing providers in the geographic area. The application is heard before an ad-ministrative
law judge if it is an initial application, the Bureau intends to oppose the appli-cation,
or somebody requests a hearing. The judge makes a recommendation to the De-partment
of Health Services Director, who has ultimate approval authority. If the Director
approves the application, the Bureau issues a Certificate of Necessity that delineates loca-tions
of the central and sub-operation ambulance stations, the types of service to be pro-vided,
average response times, and the geographic area to be covered.
1 Constitution of the State of Arizona, Article XXVII, Regulation of Public Health, Safety and Welfare.
6
Current Approach Does Not
Meet Goals and Is Unnecessary
The CON system as established in statute does not fulfill its intended goals and is not neces-sary
for the fulfillment of these goals. First, the CON system does not ensure all areas of the
State are covered by a ground ambulance service. Specifically, it does not oblige ambulance
services to cover remote or unprofitable areas outside the area delineated in their CON. In
areas with insufficient coverage, unregulated services sometimes substitute for ambulance
providers. Second, because the Bureau does not effectively monitor and enforce the quality
requirements that are contained within the CON, the current CON system does not ade-quately
ensure quality ambulance service to the public. Additionally, the CON system is
unnecessary for meeting such regulatory goals as quality assurance and fee regulation.
CONs do not guarantee coverage—The CON statutes do not provide the Bureau the
authority to compel providers to cover remote or unprofitable areas or to improve response
times to these regions. Bureau officials indicated that some sections of the State are not in-cluded
in any provider’s CON service area or lack adequate coverage. If the area is uncov-ered,
a CON holder in an adjacent region normally provides service. In these situations, the
provider is not required to meet response time standards because these regions are not
within its CON. Uncovered and underserved areas include some stretches of state high-ways,
such as Interstate 89 from Flagstaff to Page, and Highway 93 from Wickenburg to
Wikieup.
Additionally, the Bureau’s method of storing CON information does not ensure that agen-cies
handling emergencies know which service is located closest to the emergency or can
respond in the shortest time. Although each CON contains important information about the
provider’s base of operation, service area, and response times, the Bureau does not delineate
this information on a map or other standardized format. As a result, this information cannot
be easily shared with other agencies. For example, the Department of Public Safety (DPS)
often has the responsibility of placing a call for an ambulance after highway accidents. Be-cause
the Bureau does not maintain CON information in a readily accessible format, DPS
develops and maintains its own ambulance provider lists and does not cross-reference its
lists with information from the Bureau. Providing standardized information could help DPS
and other local and state agencies ensure that the ambulance services called are CON hold-ers,
and the fastest and closest service to the accident.
Unregulated services and costly air ambulances fill deficiencies—Rescue services and air
ambulances are often used in place of ambulances for areas that have inadequate ambulance
coverage. While rescue services may represent the only feasible alternative for emergency
transport in undercovered areas, the State does not regulate these providers. Under A.R.S.
§36-2217(A)(4), rescue vehicles are exempt from CON regulations because they “are pri-marily
used to provide on scene stabilization.” However, in uncovered or undercovered
areas, where immediate ambulance transport is not possible, rescue services can either
transport patients to rendezvous with the nearest ambulance or directly to a hospital.
7
Moreover, because rescue services are exempt from regulation, they can use this exemption
as a way to provide unlicensed ambulance transport and avoid the CON application proc-ess.
Because they are unregulated, the Bureau cannot directly monitor rescue service quality.
Similarly, air ambulances have helped alleviate some of the difficulty covering remote areas,
particularly if it is evident that ground transport will result in especially lengthy response
times. However, air ambulances are more expensive than ground transports and are unnec-essary
for some types of inter-facility transports in which the patient is stabilized.
CONs ineffective for ensuring quality—In addition to not guaranteeing ground ambulance
coverage, the CON system does not meet its goal of providing an effective method for en-suring
quality service. Although providers’ certificates contain required response times for
their service areas, and although ambulance providers must record this information and
submit it to the Bureau, there is no standardized definition of “response times” in Bureau
statutes or rules. As a result, CON holders may be calculating response times differently.
Further, the Bureau does not consistently conduct analysis of this data. Currently, the Bu-reau
conducts a review of dispatch logs only if complaints have been made against the pro-vider.
Moreover, required response times reflected on the CONs are estimates the providers
calculate at the time they submit their initial application. Consequently, response times may
be out-of-date because they do not reflect population growth or other changes in an area’s
demographics.
Other quality indicators, such as patient outcomes, are not incorporated in CONs or re-viewed
in the CON application and renewal processes. In fact, although CON holders are
required to renew their certificates every three years, the Bureau does not conduct perform-ance
reviews and rarely denies a request for renewal.
CONs unnecessary for ensuring quality and regulating fees—Ambulance service quality
and charges could be regulated without the CON system. Many emergency medical service
agencies, in states without a CON system, monitor response times and suspend provider
services. Furthermore, the Bureau has quality control regulations that do not depend on the
CON system. For example, it has regulations regarding how hospitals oversee emergency
medical personnel, ambulance design requirements, inspections of EMT/paramedic certifi-cations,
and vehicle inspections. Additionally, the fees ambulance providers charge can be
regulated without the CON system. Currently, the Bureau sets ambulance provider fees
based on the CON service area. However, this is not required by statutes or rules.
CON System
Limits Competition
While the CON system does not meet its intended goals, it also limits competition in the
ambulance industry. The Certificate of Necessity system creates a barrier to other service
providers wishing to enter the market, and the application process upon which it is based is
8
perceived as favoring current CON holders. Moreover, because the Bureau administers the
CON at the statewide level, local governments are denied a role in choosing ambulance
service.
CON system creates a barrier to entering the market—Companies and local governments
that wish to provide ambulance services in Arizona face substantial barriers. In addition to
demonstrating their own qualifications for providing services, applicants can be required to
demonstrate that the existing ambulance service provider does not meet the provisions of its
Certificate. After the applicant submits all required information, the Department of Health
Services establishes a public hearing date and notifies all existing ambulance services in the
proposed service area. If existing services or other interested parties file an intervention, the
applicant may need to demonstrate at the hearing that the current CON holder is not ade-quately
meeting demands for service in the area.
Because the Bureau can require the applicant to demonstrate that current ambulance serv-ices
are not meeting public need, the system tends to work in favor of existing CON holders.
If existing CON holders are meeting the response times specified on their certificates, and
responding to all calls, the Department Director may decide there is no need for new serv-ice,
even if applicants can demonstrate faster response times or other service improvements.
For example, Yuma’s fire department applied to the Bureau for a CON. After a long and
controversial process, the fire department eventually withdrew its application, citing as rea-sons
the existing provider’s opposition, the lengthy and legally expensive application proc-ess,
and overall lack of support from the Bureau. Several other city fire departments are also
interested in applying for a CON but are reluctant to do so, because they expect to face
strong opposition from the current CON holders in their areas.
In addition to limitations imposed by the CON system, competition within the ambulance
industry may decrease even further because of industry changes. Specifically, the State’s
two largest private ambulance providers have merged. This merger will significantly con-centrate
the number of providers owned by one company. Currently, the merged company
holds CONs for Maricopa, Pima, and Yuma Counties as well as for other areas of the State,
and controls approximately 41 percent of the State’s registered ground ambulances. Com-bined
with the CON system, these industry changes could make it even more difficult for
new providers to enter the market.
Denies local governments a role—At the local (county or municipal) level, limiting compe-tition
through the CON system denies local governments a role in selecting ambulance pro-viders.
Local governments may be in a better position to find ambulance services that are
suitable to their communities’ needs, including the possibility of providing services through
their own fire departments.
9
CON System Should
Be Reevaluated
Given that the CON system does not meet its goals, but limits competition, other methods of
protecting public health and safety should be considered. Specifically, the Legislature
should consider whether other types of statewide or local ambulance regulation might be
more effective. Regardless of whether the Legislature maintains or eliminates the CON sys-tem,
the Bureau could improve efforts to ensure quality.
Legislative guidelines for regulation suggest that state governments consider whether the
“benefits to the public outweigh” the effects of reduced availability of services. These guide-lines
also recommend that governments provide minimum levels of regulation to meet
public need. The Legislature could consider these factors when deciding the future of the
CON system.1
The Legislature should consider other forms of regulation—A 50-state survey revealed that
only 7 states, including Arizona, use the CON system. It is more common for states to li-cense
ambulance providers. Additionally, some states supplement statewide regulation
with local regulation, allowing the county or municipality to determine the amount of serv-ice
that is appropriate for their area. These regulatory approaches allow for more competi-tion
and/or local control. For example:
n Strictly licensure—Providers are licensed by the state to offer ambulance service. The
state does not limit competition by controlling the number of ambulance providers.
Quality of services is still regulated by the state or local EMS agencies through inspec-tions
of EMT/paramedic certifications, inspections of ambulances, collection and moni-toring
of response time data, and other quality controls. States that use a similar model
include Illinois, Kansas, Montana, and Texas.
n Licensure combined with local control—The state licenses the ambulance service.
Counties determine appropriate levels of service and issue request for proposals to es-tablish
exclusive operating areas for providers through a competitive process. Quality
control measures are contained within state regulations and local plans or they are con-tained
entirely in the local plans, but are based on state guidelines. Alternatively, re-gional
councils can administer local plans. States that use a similar model include Cali-fornia,
Colorado, Oregon, and Washington.
Arizona’s Bureau of Emergency Medical Services has already implemented steps that en-hance
the duties of regional offices. If the Legislature were to remove the CON system, this
regionalization effort could be used as the first step toward increasing the regulatory
authority of local agencies over ambulance services.
1 Shimberg, Benjamin and Doug Roederer. Questions a Legislator Should Ask. The Council on Licensure,
Enforcement, and Regulation/Council of State Governments. Lexington KY, 1994.
10
Given the variety of regulatory approaches available, the Legislature may want to direct the
Bureau to form a study group to advise it on the future of Arizona’s ambulance regulatory
system. Any study group should be composed of a wide variety of stakeholders, including
regulators and governmental ambulance and rescue service providers, as well as represen-tatives
of the for-profit ambulance industry.
If the CON is continued, quality and coverage oversight could be improved—Regardless of
whether the Legislature continues the CON system, the Bureau should improve its efforts to
monitor quality by:
n More thoroughly using the regulatory mechanisms that are part of the CON, such as the
power to revoke or suspend a CON or deny a CON renewal, to monitor quality.
n Updating and improving response time measures, and holding providers accountable
for these response times. The Bureau may also develop and systematically monitor other
quality measures.
n Creating easily accessible documentation that lists or maps information contained in the
CON about provider service areas and response times. Other emergency agencies can
use this information to verify that they dispatch the appropriate and/or nearest ambu-lance
service.
Recommendations
1. The Legislature should consider directing the Bureau to form a study group to evaluate
possible changes in the manner in which Arizona regulates ambulance services. This
group should study various options, including the following:
a. Licensing providers to ensure quality, without limiting competition by controlling
the number of providers; or
b. Licensing providers and allowing local governments to establish operating areas
through a competitive process.
2. Whether or not the CON system is continued, the Bureau should use its regulatory
authority to enforce quality controls such as response times.
3. The Bureau should assemble the information it has regarding providers and their service
areas into easily accessible lists or maps so that this information can be used by other
agencies.
11
FINDING II
THE BUREAU DOES NOT ADEQUATELY
HANDLE COMPLAINTS
The Bureau’s system for investigating and resolving complaints against EMTs, paramedics,
ambulance companies, and related entities needs further improvements. Since August 1998,
the Bureau has taken steps to ensure final resolution decisions are made in a more timely
manner. However, the Bureau continues to have systematic problems in how it handles in-formal
and formal complaints, including a lack of appropriate staff training, long delays,
inadequate file tracking, and an inappropriate computer tracking system. The Bureau rec-ognizes
many of these problems and is beginning to make further improvements in some
areas.
Current Complaint-
Handling Process
Under A.R.S. §36-2204 and §36-2245, the Bureau is responsible for investigating and resolv-ing
complaints against EMTs, paramedics, ambulance companies, emergency personnel
training programs, and hospitals that oversee the work performed by EMTs and paramed-ics.
Complaints against individuals include such matters as substandard patient care and
unprofessional conduct, while complaints against ambulance companies include billing
disputes, response times, and territorial infringement.
The Bureau’s complaint-handling process differs according to the nature of the complaint.
Bureau staff informally handle some complaints, including non-patient care complaints
against ambulance companies, hospitals that oversee emergency medical personnel, and
training programs. The Bureau does not maintain a log or written reports regarding com-plaints
handled informally. In contrast, all complaints against EMTs or paramedics, com-plaints
involving patient care allegations, and appealed informal complaints are handled
formally, under the following steps:
n Bureau staff refer the complaint to the Department of Health Services’ Office of Special
Investigations.
n The Office of Special Investigations logs the complaint and investigation information
into its Complaint Tracking System database.
n The Office of Special Investigations conducts interviews and other investigative activities
and prepares a report containing all pertinent information.
12
n The complaint and investigative report are submitted to the Bureau’s Medical Director
or Bureau Chief for a hearing, if necessary, and resolution.
The Bureau has a wide range of options for formal complaint resolution, including no ac-tion,
censure, civil penalties, probation, requiring additional training, and suspending or
revoking licenses.
Some improvement since 1988 audit report—Although problems remain, the Bureau’s cur-rent
complaint-handling process includes some improvements since the Office of the Audi-tor
General’s last report in 1988 (Auditor General Report No. 88-12). That report noted se-vere
problems, including the lack of any system for tracking complaints and the failure to
investigate or take action on even serious patient care complaints. The current audit found
that although timeliness remains a problem and other improvements are still needed, prog-ress
has resulted from the Bureau’s current practice of referring certain types of complaints
to the Office of Special Investigations, and the Office’s consistent, formal approach to com-plaint
tracking, investigation, and reporting. Furthermore, in contrast to the 1988 findings
showing that few actions were taken, the Bureau took action to revoke, suspend, or other-wise
decertify 26 licensees between fiscal years 1993 and 1998. Likewise, it placed 18 licen-sees
on probation during the same period.
Final Resolution Decisions
Delayed in the Past
Although since August 1998 the Bureau has taken steps to ensure final resolutions are not
unnecessarily delayed, previous delays compromised the Bureau’s ability to resolve com-plaints
and in some cases impose appropriate discipline.
The Bureau was slow to make final resolution decisions on a significant number of com-plaints
prior to August 1998. For example, Auditor General staff found 22 complaints that
were open for more than two-and-one-half years, and in which the complaint investigations
were completed in a timely manner. However, the files were held awaiting a final decision
for an average of more than two years. These cases were finally closed when a new interim
Bureau Chief reviewed the case backlog and took action.
These delays negatively impacted the Bureau’s handling of complaints. For example, the
Bureau did not resolve 8 complaints that included a total of 21 separate allegations. These
allegations included failure to dispatch ambulances closest to the scene, and that substan-dard
care resulted in patient deaths. By the time the cases were discovered, up to four years
had elapsed since the investigations were completed. The interim Bureau Chief closed the
complaints without taking punitive action. In at least one of the cases, this lack of action was
directly attributed to “the considerable period of time that has passed.”
13
Other Complaint-Handling
Problems Still Exist
The Bureau’s handling of complaints continues to be hampered by other factors. Informal
complaints are hampered by the lack of monitoring and by the lack of training for staff who
handle these complaints. Formal complaints are hampered by long delays, inadequate file
tracking, an inadequate computer system, and insufficient communication with complain-ants.
Informal complaints not tracked and most staff not trained—The Bureau’s handling of in-formal
complaints has been hampered by a lack of tracking. The Bureau does not note the
complaint or resolution in a centralized database or log. As a result, management cannot
determine whether these complaints are resolved in a timely manner and cannot monitor
the quality of investigations or ensure that problematic providers are easily identified. While
informal resolution is appropriate for some complaints, and in fact is required by statute
A.R.S. §36-2245(E) for complaints involving ambulance company rates and charges, the Bu-reau’s
failure to track such complaints prevents it from ensuring that such complaints are
handled appropriately or from discerning repeated problems or industry-wide trends.
Lack of tracking is also a problem because the Bureau cannot assess its compliance with
timeliness standards established in statutes for some of these complaints. A.R.S. §36-2245
contains specific processing deadlines for complaints against ambulance companies. For
example, the Bureau must respond to a complainant within 15 days after receiving a written
complaint, determine if the complaint has merit within 45 days of receiving ambulance
company records, and notify all parties within 5 days if a complaint is resolved. However,
when informal complaints are investigated and resolved by Bureau staff, they are not en-tered
into the Bureau’s complaint tracking system or tracked otherwise, so that the Bureau’s
compliance with the statutory deadlines cannot be monitored.
A second problem is that informally handled complaints may not receive the same level of
investigative expertise as formal complaints. Bureau staff who handle informal complaints
have not received formal training in complaint investigation. As a result, they may not be
optimally knowledgeable about interviewing complainants, identifying potential evidence,
and drawing legally defensible conclusions. In contrast, formal complaints are investigated
by the DHS Office of Special Investigations, whose certified investigator has received na-tionally
recognized training in investigating complaints.1
1 The Council on Licensure, Enforcement, and Regulation (CLEAR) provides investigators/inspectors
training specifically for licensing and regulatory boards. CLEAR’s National Certified Investiga-tor/
Inspector Training curriculum offers training in interviewing techniques, evidence development,
administrative law, and report writing.
14
Formal system also contains problems—The Bureau also continues to have problems han-dling
formal complaints. Specifically, formal complaint-handling problems include:
n Slow complaint handling—While the Bureau has made progress since the 1988 Audi-tor
General’s report, this audit found that many complaints were still not resolved in a
timely manner. The Bureau has not established target time frames for complaint resolu-tion,
but like other medical regulatory boards in Arizona, it should be able to resolve
complaints within 180 days. However, the Bureau does not meet this standard. The
analysis covered complaints received during fiscal years 1992-93 through 1997-98. Dur-ing
the six-year period reviewed, the Office of Special Investigations investigated 152
complaints against ambulance companies and 135 other complaints, and conducted 73
recertification background checks.1 As shown in Table 2 (see page 15), about 40 percent
of all complaints required more than 180 days to resolve. Additionally, although Bureau
officials regard patient care complaints as the most important, 33 complaints required
more than 180 days to complete. Four of these complaints took more than 720 days, or
almost two years, to complete.
n Complaint file custody not adequately tracked—Once the Office of Special Investiga-tions
returns complaint files to the Bureau, the locations of the files are not adequately
tracked. For example, during the course of the audit, Bureau staff were initially unable to
provide six complaint files to auditors because the files were in the custody of different
staff than those originally thought to have them. Some of these complaints included se-rious
allegations, including patient care problems and impersonation of an EMT. Al-though
all files were eventually located and provided to audit staff, even a temporary
loss can cause problems.
Complaint files need to be consistently tracked and their location known. They serve as
the sole repository for investigation reports, interview results, and supporting docu-mentation,
so loss of a file can seriously compromise the Bureau’s ability to appropri-ately
resolve complaints in a timely manner. Despite the importance of complaint files,
the Bureau still lacks practices to track them. It does not have a formal process for trans-ferring
custody of files among Bureau staff, and its tracking system does not flag com-plaints
when they reach an excessive age to alert staff that files may be misplaced or lan-guishing
in the process.
n Computer tracking system inadequate—The computerized complaint tracking sys-tem
database used for tracking the Bureau’s formal complaints is inadequate for the Bu-reau’s
needs. This complaint tracking system was developed for use by another DHS
division and has not been modified to fit the requirements of the Bureau’s complaints.
1 Background checks are initiated when the Bureau receives information suggesting it may not be appropri-ate
to renew an individual’s certification. According to Bureau staff, these allegations typically come from
coworkers who believe the individual to be incompetent or unreliable.
15
Some critical fields are either missing or do not apply to Bureau complaints.For exam-ple,
the complaint tracking system does not track statutory processing deadlines for
complaints against ambulance companies.
The complaint tracking system also makes it difficult to monitor different types of inves-tigations.
It does not distinguish among the different types of investigations (initial certi-fication
and recertification background investigations, complaints against EMTs and
paramedics, and complaints against ambulance companies). Therefore, users cannot
easily query it for basic certification, recertification, or complaint-handling trends or sta-tistics.
Table 2
Department of Health Services
Bureau of Emergency Medical Services
Days Needed to Resolve Complaints
Years Ended June 30, 1993 through 1998
Days Type of Complaint
to
Resolve 1 Recertification Ambulance All Other
Total
Complaints
Percentage of
Resolutions by
Number of Days
0-180 52 93 70 215 60%
181-360 16 19 31 66 18
361-720 5 19 27 51 14
Over 720 0 21 7 28 8
Total 73 152 135 360 100%
1 Resolution calculated from the date the complaint is received to its closure.
Source: Auditor General staff analysis of Department of Health Services, Bureau of Emergency Medical
Services’ Complaint Tracking System data for years ended June 30, 1993 through 1998.
Complainants dissatisfied with process—The Bureau’s complaint-handling process and
untimely complaint resolution has caused complainant dissatisfaction, according to com-plainant
letters and interviews. For example, one complainant wrote a letter to DHS investi-gators
stating the following about the amount of time needed to address the complaint:
“It appears…you did little actual investigation into the incident despite the extensive time
you took….I would have presumed that, given the amount of time you had to conduct your
investigation it would have been more thorough. I am disappointed and believe that if this
simple matter took this long (and produced this little) then someone needs to take a closer look
at this agency.”
16
Further, although the Bureau complies with A.R.S. §36-2245, which requires it to notify
complainants that their written complaints have been received and are being investigated, it
does not adequately keep consumers informed throughout the complaint process. In some
cases, complainants do not receive any further information until the Bureau notifies them
that their complaint has been closed.
Bureau Beginning to
Make Some Improvements
The Bureau has recognized some of these complaint-handling problems and is beginning to
make improvements, although additional work is needed. The Bureau plans to implement a
new case management plan, which includes policies and procedures for complaint han-dling.
Further, the Bureau and the Office of Special Investigations have recognized the need
for an improved complaint-tracking system and are taking steps to resolve some of these
problems. However, additional changes are required to correct problems.
Bureau plans to implement new case management plan for formal complaints—In order to
address problems with complaint handling, the Bureau is currently drafting a new case
management plan. This plan covers all aspects of complaint handling, including receiving
and processing complaints, complaint tracking, and file location. As part of this new ap-proach,
the Bureau has hired an ombudsman. This position’s duties will include receiving,
routing, and tracking complaints from receipt to resolution. Bureau management believes
this position will help the Bureau route complaints to the appropriate investigator or staff
person, track complaint progress, and ensure complaints are resolved in a timely manner.
The plan also establishes a standard of 180 days to resolve complaints.
Need for improved complaint-tracking system identified—Both the Bureau and the DHS
Office of Special Investigations recognize the need for an improved complaint-tracking sys-tem.
For example, an improved system could capture processing deadlines mandated by
A.R.S. §36-2245 for informal complaints against ambulance companies, “flag” complaints
that are not progressing, and allow staff to easily obtain critical information and trends
through data queries.
The Office of Special Investigations is currently considering its needs and investigating both
commercially available software and complaint-tracking systems used by other Arizona
investigative agencies. Until a new computerized tracking system is identified and pur-chased,
the Bureau and Office of Special Investigations are conducting bi-weekly meetings
to manually track complaints and ensure they are resolved in a timely manner.
Although the Bureau’s plans to improve complaint handling represent an improvement,
DHS should make it a priority to follow through on these plans, and monitor the effect of
these changes. Also, in addition to the improvements covered by the plan, the Bureau
17
should require that informal complaints be entered into the complaint tracking system for
monitoring purposes and address staff training needs.
Recommendations
1. The Bureau should continue to develop and eventually adopt its case management plan,
including the standard of resolving complaints within 180 days.
2. The Bureau should continue efforts to identify and eventually obtain the type of com-plaint-
tracking database needed and available. Specifically, this database should include
key fields to handle complaints unique to the emergency medical service industry, track
statutory time frame processing requirements, identify the current location of complaint
files, and differentiate between types of investigations.
3. The Bureau should develop a mechanism to note information on informally handled
complaints. At a minimum, this information should be used to ensure that the Bureau
meets statutory processing deadlines for ambulance company complaints, handles in-formal
complaints appropriately, and identifies industry-wide problems.
4. The Bureau should provide investigative training for staff who handle informal com-plaints.
5. The Bureau should develop procedures for transferring and tracking complaint files, to
ensure that their location is always known and the cases do not languish.
6. The Bureau should provide complainants an explanation of the complaint-handling pro-cess
and periodically update the status of their complaints.
18
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19
OTHER PERTINENT INFORMATION
During the audit questions arose as to whether the Bureau’s former Medical Director had a
potential conflict of interest and, if so, whether it affected the Bureau’s handling of regula-tory
matters.
Questions were raised regarding whether the former Medical Director had a potential con-flict
of interest as a result of her husband’s employment with an ambulance company. Be-cause
statutes require the Medical Director to be an active emergency physician, all Bureau
Medical Directors face conflict situations when their decisions would affect the hospitals
they work in, and as a result they must recuse themselves from such decisions. The official
in question had a wider range of potential conflicts, since her husband’s company and its
competitors provide much of the ambulance service in the State. Although the Bureau did
not consistently follow its own policies regarding this official’s participation in decisions, the
Auditor General staff’s review of available files revealed no inappropriately resolved com-plaints.
Former Medical Director faced potential conflict of interest—Industry representatives, De-partment
personnel, and legislative staff raised questions during the audit regarding
whether the Bureau’s former Medical Director had a potential conflict of interest. The official
in question served from November 1, 1993, until her resignation effective October 30, 1998.
Questions arose because beginning in 1994, her spouse worked for the State’s largest for-profit
ambulance service provider.
Under state statutes and Bureau procedures, the Medical Director is responsible for many
aspects of regulating the emergency services industry, such as reviewing complaints against
ambulance companies, emergency medical technicians, and paramedics. Additionally, the
Medical Director consults on virtually every aspect of the Bureau’s activities. These respon-sibilities
placed the former Medical Director in the position of making decisions that could
potentially impact or be impacted by her spouse’s employer.
Bureau did not consistently follow its policy—In response to this potential conflict, the Bu-reau
obtained legal advice in 1995. The Bureau’s Attorney General representative advised
that the former Medical Director did not have a legal conflict of interest because her hus-band
did not hold a financial interest in his employer’s company. However, the attorney
recommended exercising caution because there could be an appearance of conflict of inter-est,
which could expose her to scrutiny and criticism. As a result, the Bureau wrote an inter-nal
policy directing the former Medical Director to refrain from reviewing any complaints
against her husband’s employer or any of its competitors, including complaints against in-dividual
employees of such companies. According to the policy, “None of these items
should be routed to” the former medical director, and she should review copies of public
records on matters covered by the policy only after the record became public.
20
The Bureau did not consistently follow its own policy for handling the potential conflict of
interest. First, the Bureau continued to route some complaints to the former Medical Direc-tor
that involved companies or employees affected by the policy. For example, she resolved
some complaints against individual emergency medical technicians and paramedics em-ployed
by the affected companies. According to the former Medical Director, the Attorney
General representative verbally approved her participation in each of these cases (current
and former attorneys recall these conversations). In addition, in all such cases reviewed by
Auditor General staff, another Bureau or Department official also reviewed the case and
came to the same conclusion as the former Medical Director. However, according to the
policy, these cases should not have been submitted to the former Medical Director at all.
Second, although the policy required the Bureau to compile a list of affected ambulance
companies every quarter, the Bureau compiled only two such lists. According to the former
Medical Director, the list would not have changed so there was no need to follow the policy
and create new lists.
Department reports attempts to avoid similar situations—To avoid this situation in the
future, the Department of Health Services reports that it now closely scrutinizes potential
conflicts of interest prior to hiring Bureau managers. For example, both the Bureau’s new
Medical Director and Bureau Chief’s potential conflicts of interest were reportedly reviewed
prior to their hiring. Additionally, Auditor General staff reviewed their conflict-of-interest
statements. The new Bureau Chief relocated to Arizona and, therefore, has no potential con-flicts.
The new Medical Director has only a limited potential conflict because he is a licensed,
practicing emergency medicine physician. This is consistent with statutory requirements
placed on the part-time, Medical Director’s position. As a result, both Bureau managers
should be able to impartially perform their duties.
Agency Response
(This Page Intentionally Left Blank)
Leadership for a Healthy Arizona
Office of the Director
1740 W. Adams Street JANE DEE HULL, GOVERNOR
Phoenix, Arizona 85007-2670 JAMES R. ALLEN, MD, MPH, DIRECTOR
(602) 542-1025
(602) 542-1062 FAX
Mr. Douglas R. Norton, CPA
Auditor General
Office of the Auditor General
2910 North 44th St., Suite 410
Phoenix, AZ 85004
Dear Mr. Norton:
Thank you for the opportunity to review the report of the Performance Audit, conducted as part of
the Sunset Review set forth in A.R.S. §41-2951 through 41-2957, of the Arizona Department of
Health Services (ADHS), Bureau of Emergency Medical Services.
The findings and recommendations contained in your report have been carefully reviewed by the
staff of ADHS, and in accordance with the instructions contained in your letter of April 2, 1999, the
enclosed response is provided.
ADHS greatly appreciates the hard work and professionalism shown by your staff during the conduct
of their audit. We also appreciate the insights provided by your staff during the audit process and
through the audit’s findings and recommendations. From the knowledge gained as a result of your
efforts, we will be able to significantly improve the work processes that relate to the certification and
regulation of emergency medical services. As a result, we will be able to better serve both the
regulated community and consumers of emergency medical services within the State of Arizona.
Sincerely,
James R. Allen, M.D., M.P.H.
Director
JRA:SPH:df
Enclosure
Page 1 of 7
ADHS Response to the Performance Audit on
the Bureau of Emergency Medical Services
Overview:
The Arizona Department of Health Services (ADHS) agrees in general with the recommendations and
conclusions of the audit team.
We feel it is important to point out that Finding I relates to a legislatively mandated activity. We
recognize there are other ways used in other states to regulate ambulance services; the CON process
has been prescribed by state lawmakers as the method for use in Arizona.
With respect to Finding II, ADHS management had recognized the need for improvement, and had
undertaken major steps toward overall improvement as well as developing specific strategies for the
issues identified within the report. Already, significant changes had been made in the leadership,
structure and operations of the Bureau:
$ The Bureau has been changed from a centralized organization of specialists to a regionalized
organization of generalists. This change allows for improved relations and communication with
our regulated clients.
$ A new Medical Director, Bureau Chief, and Paralegal Investigator have been hired.
These changes should be seen as a major and ongoing commitment on the part of ADHS to address the
findings cited in the report and to improve upon the Bureau=s ability to serve and protect the public.
Finding I - AThe Certificate of Necessity is an Unnecessary Form of Regulation@
(A) Current Approach Does Not Meet Goals and Is Unnecessary
This section of the report comments upon the existing Certificate of Necessity approach to approving
ambulance operations. Specifically:
CONs do not guarantee coverage - The report finds that some areas of the state are not covered, and
that ADHS cannot compel providers to offer service in remote or unprofitable areas. While we are
aware this is true, we do not know of a system that is able to accomplish this. In any system there are
some areas that simply cannot support ambulance services. These reasons may be economic in part, but
it is also difficult to attract and retain qualified personnel for an ambulance service with a paucity of
calls. In order to address some of the problems faced by certain areas within Arizona, ADHS is
supporting legislation to allocate funding for the improvement of rural emergency medical services.
This section also raises a concern about whether ADHS has assured that the Department of Public
Safety (DPS) has correct and current information on the location and capabilities of ambulance
Page 2 of 7
providers. While we can provide DPS with such information, ambulance dispatching is conducted
under the color of local authority, not through DPS.
Unregulated services and costly air ambulances fill the gap - The report finds that rescue and air
services are often used in place of ambulances for areas that have inadequate ambulance coverage.
ADHS shares the concern of the auditors that rescue vehicles occasionally and perhaps improperly
cross the line into the provision of ambulance service. While this may be symptomatic of unmet need,
there are also local political issues at play. ADHS will consider approaches to integrate rescue services
and personnel into the emergency medical services system.
Upon completion of the new ground ambulance rules, the Bureau will begin working on drafting new
regulations for air ambulance services. Opportunities exist within that context for developing air
ambulance utilization criteria.
CONs ineffective for ensuring quality - The observation is made that the CON system does not meet its
goal of assuring quality services because the Bureau does not routinely conduct analyses of response
time data. We recognize opportunities exist to improve upon this. Response time is not uniformly
calculated nor reported. It is important to note the Bureau is taking measures now, in concert with the
EMS community, to establish a regulatory definition of Aresponse time.@ A second critical step is the
establishment of electronic reporting of this data to facilitate its analysis. We are considering all
options in regard to electronic reporting.
It is also important to recognize that response time alone is an inadequate expression of quality. The
total amount of time between the event and the administration of definitive care at a hospital may be
meaningful to patient outcome, but the ambulance response time is a single parameter within this
timeframe (See table 1. below.) ADHS is committed to finding more effective and reliable ways to
evaluate quality.
Table 1.
System Reaction Time Total Run Time Care Time
Access Time Processing Time Response Time Scene Time Transport Time Definitive Care
Time
Access Time is the amount of time between the event and the call for help.
Processing Time is the amount of time between the call for help and when the ambulance is dispatched.
Response Time is the amount of time between when the ambulance is dispatched and when the ambulance arrives on the
scene.
Scene Time is the amount of time between when the ambulance arrives on the scene and when the ambulance departs the
scene.
Transport Time is the amount of time between when the ambulance departs the scene and when the ambulance arrives at
its destination.
Definitive Care Time is the amount of time between when the ambulance arrives at the facility, and definitive care is
rendered.
Page 3 of 7
CONs unnecessary for ensuring quality and regulating fees - The report finds that ambulance service
quality and charges could be regulated without the CON system. Certainly other methods for
evaluating service quality or establishing rates could be used with or instead of the CON process. The
regulation of fees has been coupled with the CON process because the CON describes a population
base within a distinct geographic area. This facilitates the ability to accurately project costs and
revenues and to determine appropriate rate structures.
(B) CON System Limits Competition
This section of the report comments upon the effect of CON on the market. Specifically:
CON System creates a barrier to entering the market - The observation is made that CON makes it
difficult for new services to enter the market and discourages competition. The CON process is built, in
part, on the premise that entities will be willing to provide services in otherwise economically
unattractive areas, if they are guaranteed that there will be limited or no competition in the particular
market as a result of (1) limitations in the awarding of CONs and (2) service restrictions on those
entities not awarded a CON (for the particular area) who would otherwise have been competitors. The
concept is that Aguaranteed@ market control over a service area can create sufficient economic incentive
for a private entity to be willing to furnish services. Obviously, the incentive would be even stronger if
Amarket control@ involved the independent setting of fees by the CON holder as opposed to the rate
regulation done by the Bureau (and, in effect, by third party payors).
Denies local governments a role - The report states the CON process denies local governments a role
in selecting ambulance providers, when they may be in a better position to determine their community=s
needs. Local governments can choose to pursue a CON, but the decision-making authority rests
exclusively with the state in the CON model for the ostensible reason that the state is in the best
position to assure the complete integration of the provider community into a statewide EMS system.
(C) CON System Should Be Reevaluated
This section of the report suggests a more effective means of regulation should be considered.
Specifically:
The Legislature should consider other forms of regulation - Should the legislature choose to pursue
this we will assist in any way possible.
If the CON is continued, quality and coverage oversight could be improved - The report finds that
quality could be improved through increased use of the authority to revoke or suspend, holding
providers accountable to response time, and creating documentation that lists or maps information
about provider service areas and response times. We agree that quality should be continually improved,
but as previously mentioned, response time is only one aspect of that. ADHS is considering all options
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in developing improved quality and outcome monitoring.
Finding I Recommendations
1. AThe Legislature should consider directing the Bureau to form a study group to evaluate
possible changes in the manner in which Arizona regulates ambulance services. This group
should consider various options, including the following:
a. Licensing providers to ensure quality, without limiting competition by controlling the
number of providers; or
b. Licensing providers and allowing local governments to establish operating areas
through a competitive process.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented pending approval from the Governor and/or the Legislature before
proceeding.
2. AWhether or not the CON system is continued, the Bureau should use its regulatory authority to
enforce quality controls such as response times.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
3. AThe Bureau should assemble the information it has regarding providers and their service areas
into easily accessible lists or maps so that this information can be used by other agencies.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
Finding II - AThe Bureau Does Not Adequately Handle Complaints@
(A) Final Resolution Decisions Delayed In the Past
This section of the report comments upon the Bureau=s ability to resolve complaints and in some cases
impose appropriate discipline. Specifically, the observation is made that some complaints were open
for an extended period of time even though the investigations had been concluded. The report also
mentions that the majority of cases have been handled promptly, and that the Bureau has made
significant improvements since the last audit.
The new Bureau Chief is certified by the Council on Licensure, Enforcement and Regulation as an
investigator. The new Bureau Chief=s background and certification will prove valuable as the Bureau
seeks to improve its training and investigative procedures. In addition, a Paralegal Investigator has now
been hired by the Bureau to manage and track complaint investigations.
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(B) Other Complaint-Handling Problems Still Exist
This section of the report finds the Bureau to be hampered by other problems. Specifically:
Informal complaints not tracked and most staff not trained - The auditors observe that lack of an
effective tracking methodology may prevent it from ensuring complaints are handled appropriately or
discovering industry-wide trends. A further observation is made that the staff handling informal
complaints have no formal investigative training. A new complaint-tracking procedure is under
development, planning for a computer-based complaint tracking program is under way, and the new
Paralegal Investigator works directly with the Bureau Chief and the Medical Director in conducting
investigations.
Formal system also contains problems - Four observations are made: slow complaint handling,
complaint files custody inadequately tracked, inadequate computer tracking system, and complainants
are dissatisfied with the process.
The report finds that the majority of complaints were handled in a timely fashion. Up to 22% of the
investigations may have taken more than one year to complete, and 8% took considerably longer. It
must be recognized that while ADHS agrees improvement is needed, some cases are extremely
complicated, necessitating interagency coordination, interviews with uncooperative or hard to locate
witnesses, or a need to await the outcome of related legal proceedings. In some instances, because of
pending legal action or other considerations, a rapidly concluded investigation does not guarantee
timely resolution and closure of a case.
The report indicated six complaint files were initially difficult to locate. On November 19th, a request
was made that these six files be located by November 25th. The location of these files was determined
and made known to the audit team on November 20th.
The report finds that the current computer complaint-tracking system makes it difficult to monitor
different types of complaints, and does not track statutory deadlines. We are aware of this and are
actively engaged in replacing this system.
Complainants have expressed dissatisfaction with complaint-handling, and are not informed
throughout the complaint process. The new case-management system will address this need.
We expect that the new Paralegal Investigator will significantly reduce the workload of investigations
being handled by OSI, and the development of appropriate software will significantly improve
operations.
(C) Bureau Beginning to Make Some Improvements
This section of the report recognizes some of the Bureau=s efforts to improve. Specifically, the
development of the new case management plan, the semimonthly status meetings, the addition of the
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Paralegal Investigator (ombudsman) and the identification of the need for improved computerized
complaint tracking are recognized.
Finding II Recommendations
1. AThe Bureau should continue to develop and eventually adopt its case management plan,
including the standard of resolving complaints within 180 days.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
2. AThe Bureau should continue efforts to identify and eventually obtain the type of complaint-tracking
database needed and available. Specifically, this database should include key fields to
handle complaints unique to the emergency medical service industry, track statutory timeframe
processing requirements, identify the current location of complaint files, and differentiate
between types of investigations.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
3. AThe Bureau should develop a mechanism to note information on informally handled
complaints. At a minimum, this information should be used to ensure that the Bureau meets
statutory processing deadlines for ambulance company complaints, handles informal complaints
appropriately, and identifies industry-wide problems.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
4. AThe Bureau should provide investigative training for staff who handle informal complaints.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
5. AThe Bureau should develop procedures for transferring and tracking complaint files, to ensure
their location is always known and the cases do not languish.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
6. AThe Bureau should provide complainants an explanation of the complaint-handling process
and periodically update the status of their complaints.@
The finding of the Auditor General is agreed to, and the audit recommendations will be
implemented.
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AOther Pertinent Information@
This section of the report contains no findings, but comments upon an alleged conflict of interest on the
part of the past Medical Director of the Bureau. It is observed that the previous Medical Director was
placed by her work responsibilities in the position of making decisions that could potentially impact or
be impacted by her spouse=s employer.
ADHS is pleased that the Auditor General recognizes the fact that no actual conflict ever arose as a result
of the former Medical Director=s ties with the provider community. The facts demonstrate that in
practice, the Bureau adopted a self-policing approach to the problem.